Colombian Road Concession Program
2013 - 2014
Projects and Financing Issues
Luis Fernando Andrade Moreno
President
Agencia Nacional de Infraestructura
June, 2013
Agenda
1. The target and ground preparation
2. The plan in motion: 4th generation of
roadway concessions
3. The project financing challenge
4. The timetable
The difficulty: Infrastructure
deficiency
Poor Quality of Roadway Infrastructure
13
España
23
Chile
50
México
53
Ecuador
81
Uruguay
100
Perú
106
Argentina
123
Brasil
126
Colombia
128
Venezuela
0
20
40
60
80
100
120
140
Source: World Economic Forum. The Global Competitiveness Report 2012-2013.
3
The difficulty: Infrastructure
deficiency
Historical low investment in transportation infrastructure
6.0%
Inversión
/ PIB
TelecomComunicaciones
Investment / GDP
Inversión
Transporte
/ PIB / GDP
Transportation
Investment
Inversión
Energía / PIB
Energy Investment
/ GDP
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Own calculations using DNP investment data
4
The actions carried out by
the current Government
Improved legal framework
▪ Creation of a PPP Law (Ley 1508 de 2012)
▪ Creation of the National Infrastructure Agency (ANI)
Building intitutional capacity
▪
▪
Governance
Capability
▪ Design of a comprehensive infrastructure investment program
based on PPP scheme
Moving forward our infrastructure
▪
▪
Robust structuring
Improved and standardized contracts
▪ Effective project management with better controls and monitoring
systems
▪ Speeding up execution
▪ Removing bottlenecks
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Other Government actions
• Additional actions to set up a supportive regulatory and legal
framework for private investment
– Infrastructure Law project in Congress
• Improving regulation to mitigate risks associated to land acquisition, social and
environmental management, and utility network displacements
– Additional contractual provisions to facilitate resolution of Force
Majeure events
– Expedited conflict resolution mechanism in standard contract
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Agenda
1. The target and ground preparation
2. The plan in motion: 4th generation of
roadway concessions
3. The project financing challenge
4. The timetable
How will the Government deliver on its promise
of closing the infrastructure gap?
- US$26 billion investment program
- Around 40 toll road PPP projects
- Construction in over 8,100 km of national roadways in the next 8
years.
The 4G
Program
Estimated investment profile for the Program
(US$ Billion of 2012)
$7
$6
$5
$4
$3
$2
$1
$0
2014
2015
2016
2017
2018
2019
2020
2021
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National roadway network under
Concession: Existing and Upcoming
RIOHACHA
Paraguachon
SANTA MARTA
Cuestecitas
BARRANQUILLA
Buenavista
San Juan
Ponedera
VALLEDUPAR
La Paz
CARTAGENA
Cruz del Viso
Carreto
Toluviejo
Carmen de
Bolívar
More than 11,000 Km
San Roque
SINCELEJO
San Pelayo
La Yé
Achí
Aguachica
Necoclí
MONTERÍA
San Marcos
Aguaclara
Planeta Rica
Palo de Letras
Caucasia
25 existing projects + 40 new
projects
Simití
El Tigre
B/MANGA
CÚCUTA
Pamplona
Barrancabermeja
ARAUCA
Remedios
Santa Fé de Ant.
Pto. Berrío
Tame
Camilo C
MEDELLÍN
Barbosa
PTO CARRENO
Bolombolo
Sogamoso
Pto. Salgar
Zipaquirá
La Manuela
Villeta
MANIZALES
Cartago
La Paila
BOGOTA
Ibagué
YOPAL
El Secreto
Pto. Arimena
Calera
Cáqueza
Girardot
Puerto Gaitán
Espinal
VILLAVICENCIO
Buga
Buenaventura
TUNJA
Sisga
Sopó
PEREIRA
ARMENIA
PTO CARRENO
Granada
CALI
Santander
De Quilichao
NEIVA
Existing projects
POPAYÁN
4G projects
Chachagüí
PASTO
MOCOA
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4G Concession Contract: Basics
Scope
•Design
•Rehabilitation, construction and/or improvement
•Operation and maintenance
•Financing
Term
•Variable, 25 – 30 years
Functional Units
Payment
•Infrastructure units with functional independence
•Size: Capex + Opex over ~US$ 50 million per Unit
•By Functional Unit based on availability
•Sources: Tolls and Government Contributions
•Discounts related to availability, quality and service, capped at ~10%.
•Evaluation by an experimented external auditor,
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4G Concession Contract: Risk Allocation
ANI’s Risks
Concessionaire’s Risks
• Construction (except tunnels)
• Operation and maintenance
• Financing
• Change in construction and operation &
maintenance input prices
• Land acquisition management (with
control and supervision of ANI)
• Insurable Force Majeure events
• Force Majeure events
• Non insurable events (e.g. natural
disasters)
• Land acquisition*
• Social consultation*
• Environmental licensing*
• Traffic (Aggregated Income)
• Utility networks (non identified networks)
* Assuming concessionaire’s proper management
Shared Risks
• Traffic (liquidity risk)
• Construction (tunnels)
• Macroeconomic risks
• Land acquisition (cost overruns)
• Changes in law
• Environmental and social management
(cost overruns in environmental
compensations)
• Utility networks (cost overruns)
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Agenda
1. The target and ground preparation
2. The plan in motion: 4th generation of
roadway concessions
3. The project financing challenge
4. The timetable
4G program financing needs
Needs: Funding US$26 billons to be invested during the next 8 years and repaid
with long term flows starting after construction phases
Investment & financing
Equity
26
Investment
(USD Billons)
Debt
Projects’ income
(average expected distribution)
20%
80%
Public
Contributions
40%
Tolls
60%
Financial closing
Note: Preliminary and estimated values, subject to modifications, adjustments and corrections.
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4G program financing constraints
Debt required for 4G concession program is large relative to the
Colombian financial market
84
76
Local
long term
financing
sources
40
25%
27%
21
Financing needs Commercial loans
139%
52%
15
Pension Funds Insurce companies Banks' portfolio
Note: Values in USD Billions, Updated at Dec-2012
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4G program financing:
The proposal
Structured
project
financing
4G program financing will target broad participation:
Banks, multilateral institutions, development banks,
institutional investors and private equity funds
Government is prioritizing the role of long term
investors (institutional investors):
Long term repayment flows and demand risk coverage
Mixed project funding:
Soft mini-perms loans and operating asset securitization
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Mixed financing strategy
Financial Closing
Debt commitments for 1/3 of
total financing needed
- Bank loans
- Loans from other
infrastructure investors
Bidding
process
Pre-construction
Refinancing after
construction phase
- Asset Based Securities
- Long term loans from
institutional investors
Construction
Signing
of
Contract
Refinancing during construction
phase
- Securities with credit risk
enhancement
- Loans from infrastructure
investors/funds
O&M
End of
construction
phase
certification
Retribution flows
according to availability*
* Discounts are applied up to a threshold related to the infrastructure availability (availability, service level and quality standard)
End of the
contract
Securitization structure
Originators
Issuers
UF 1
Securities
Underwriting
commitments
Investors
Inv. 1
% UF 1
…
Tranche j
…
…
…
Cession
% UF m
UF m
$$$
Tranche k
Inv. n - 2
Lead Bank/Fund
Contingent
purchase
Multilaterals /
development Banks
Substitution / firm
commitment
$$$
17
Remaining Risks:
Mitigation alternatives
Construction
(Cost, licensing, and land availability)
MODOS
Operational
(Non-availability, service levels and quality
standards)
Liquidity (traffic)
Early termination
• Securitization after construction is completed
• Third party guarantees for credit risk during construction phase
• Predetermined discount caps affecting repayment flows
• Financing structure and sizing according to the perceived volatility from
availability payments
• Strong insurance coverage requirements
• Recurrent non-availability of infrastructure as cause for early
termination of the contract
• Overcollateralization
• Third party liquidity guarantees / reserve account
• Securitization with tranches / subordination
• Adequate and timely causes for early termination
• Repayment of investments and expenses are covered by predetermined
liquidation formulas
• Predetermined contractual terms and procedures for takeover rights by
creditors
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Agenda
1. The target and ground preparation
2. The plan in motion: 4th generation of
roadway concessions
3. The project financing challenge
4. The timetable
4G Program Timetable
Rounds
# of
projects
1st Round FONADE
4
1st Round PROSPERITY
5
2nd Round FONADE
7
3rd Round FONADE
12
2nd Round
PROSPERITY
4
1st Round
ADAPTATION FUND
3
2nd Round
ADAPTATION FUND
5
1Q 2012
2Q 2012
3Q 2013
Prequalification
4Q 2012
1Q 2013
2Q 2013
3Q 2013
4Q 2013
1Q 2014
Bidding process
Prequalification
Bidding process
Prequalification
Bidding process
Prequalification
Prequalification
Bidding process
Bidding process
Prequalification
Bidding process
Prequalification
Bidding process
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Thank You
www.ani.gov.co
Twitter
@ANI_Colombia
Facebook
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