#PPP PROJECTS. Dimitri Zaninovich. Director of Infrastructure and Sustainable Energy National Planning Department

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1 #PPP PROJECTS Dimitri Zaninovich Director of Infrastructure and Sustainable Energy National Planning Department February, 2014

2 1. Starting Point Colombia s Macroeconomic Overview Upcoming Opportunities Logistical Costs Competitiveness in Infrastructure Investment in Infrastructure 2. Execution in this Government Government Budget Construction of Four Lane Highways Reforms in this Government 3. Our program Fourth Generation of Road PPPs (4G) 4G PPP Contract Projects in bidding process Next projects in the pipeline Benefits of the 4G Program 2

3 1. Starting Point Colombia s Macroeconomic Overview Upcoming Opportunities Logistical Costs Competitiveness in Infrastructure Investment in Infrastructure 2. Execution in this Government Government Budget Construction of Four Lane Highways Reforms in this Government 3. Our program Fourth Generation of Road PPPs (4G) 4G PPP Contract Projects in bidding process Next projects in the pipeline Benefits of the 4G Program 3

4 COLOMBIA S GDP PER CAPITA HAS TREEFOLD SINCE 2003 Source: IMF 4

5 COLOMBIA S REMARKABLE PROGRESS ON DOING BUSSINES RANKING BETWEEN DOWNWARD TREND ON UNEMPLOYMENT RATE % 9,4 Rate of unoccupied people of the economic active population Positive Values show improvements in business environment 5

6 Signed free trade Agreements Peace Process Img by Daniel Hannan CANADA UNITED STATES EUROPEAN UNION EFTA (SWITZERLAND, LIECHTENSTEIN, ICELAND AND NORWAY) by Barry Rubin INCREASE IN AGRICULTURAL EXPORTS INCREASE IN OIL AND COAL EXPORTS PROXIMITY TO EXPANDING PANAMA CANAL POST CONFLICT TRANSPORT INFRASTRUCTURE PENETRATION IN TERRITORIES 6

7 Logistical costs as a % of GDP Perú Argentina Brazil Colombia Mexico Chile 32% 27% 26% 23% 20% 18% USA OCDE Singapore 10% 9% 9% 0% 5% 10% 15% 20% 25% 30% 35% Source: Barbero (2010). Cargo logistics in Latin America and the Caribbean Agenda to promote development 7

8 Global Competitiveness Indices Roadways Railways Colombia 130 Colombia 113 Venezuela 128 Venezuela 109 Brasil 120 Argentina 106 Argentina 103 Brasil 103 Peru 98 Peru 102 Mexico 51 Chile 65 Ecuador 50 Mexico 60 Chile 27 Ecuador 57 España 13 España Source: The Global Competitiveness Report World Economic Forum 8

9 Global Competitiveness Indices Ports Airports Venezuela 141 Venezuela 135 Brasil 131 Brasil 123 Colombia 110 Argentina 111 Argentina 99 Colombia 96 Peru 93 Peru 85 Ecuador 69 Ecuador 70 Mexico 62 Mexico 64 Chile 32 Chile 46 España 12 España Source: The Global Competitiveness Report World Economic Forum 9

10 Investment in Infrastructure as a % of GDP Investment in Communications/GDP Investment in Infrastructure/GDP Investment in Energy/GDP Source: National Planning Department 10

11 1. Starting Point Colombia s Macroeconomic Overview Upcoming Opportunities Logistical Costs Competitiveness in Infrastructure Investment in Infrastructure 2. Execution in this Government Government Budget Construction of Four Lane Highways Reforms in this Government 3. Our program Fourth Generation of Road PPPs (4G) 4G PPP Contract Projects in bidding process Next projects in the pipeline Benefits of the 4G Program 11

12 Budget Execution Billion Pesos Nation Climate Fund 4,5 7, ,91 * In2012 we saw thehighestlevelof execution of the last 13 years; in2013, with our target of 90% execution, we hope to achieve $8,9 billion. Source: Transportation Ministry * Includes resources assigned to the Climate Fund 12

13 Construction of Four Lane Highways (Km) Executed Target 13

14 1. Strengthening of Institutions Anti-corruption Law Structuring Conflicts between independent engineers and sponsors PPP Law 20% limit on contractual additions Incentives for Unsolicited Proposals Payments based on Availability ANI Improves governance Solid organizational structure 2. Infrastructure Law Improved efficiency on land acquisition Streamlined environmental licensing process Conflict resolution in public utility network transfers 14

15 1. Starting Point Colombia s Macroeconomic Overview Upcoming Opportunities Logistical Costs Competitiveness in Infrastructure Investment in Infrastructure 2. Execution in this Government Government Budget Construction of Four Lane Highways Reforms in this Government 3. Our program Fourth Generation of Road PPPs (4G) 4G PPP Contract Projects in bidding process Next projects in the pipeline Benefits of the 4G Program 15

16 CAPEX* (USD) LENGTH Existing PPP Projects 4G Program 11.8 Bill 5,176 km 25 Bill Over8,000 km (1,200 km of fourlane highways) 16

17 Scope Design Rehabilitation, construction and/or improvement Operation and maintenance Financing Term Variable, years Functional Units Project divided in Functional Units: Infrastructure units with functional independence Size: Capex+ Opexover ~US$ 50 million per Unit Remuneration Variable Remuneration By Functional Unit based on availability Two principal sources: Tolls and Government Contributions All sources are subject to availability discounts (Indicator for availability, service levels and quality standards). Discounts are capped at ~10%. Ongoing evaluation of quality standards and service levels per Unit by an independent engineer, hired by ANI 17

18 Sponsor Risks Construction (except tunnels) Operation and maintenance Financing Change in construction and operation & maintenance input prices Land acquisition management (with supervision of ANI) Insurable Force Majeure events Traffic (liquidity risk) Macroeconomic risks ANI Risks Force Majeure events Non insurable events (e.g. natural disasters) Land acquisition* Social consultation* Environmental licensing* Traffic (Aggregated Income) Utility networks (non identified networks) Shared Risks Construction (tunnels) * Assuming sponsor s proper management Land acquisition (cost overruns) Environmental and social management (overruns in environmental compensations) Utility networks (overruns) 18

19 Project USD MM Girardot - Puerto Salgar 477 Mulalo - Loboguerrero 600 Perimetral de Oriente de Cundinamarca 600 Cartagena - Barranquilla 480 Conexión Norte 490 Rio Magdalena Pacifico Pacifico Pacifico TOTAL

20 14 Solicited proposals and 5 unsolicited proposals on prequalification, near the start of the bidding process Solicited proposals USD MM Magdalena River Recovery 618,5 Autopista Mar ,5 Autopista Mar Rio Magdalena ,5 Sede Superintendencia notariado y registro 300 Santana Mocoa Neiva 870 Bogotá Villavicencio Popayán Santander de quilichao 848,5 Puerta de Hierro - Cruz del viso 386,3 Neiva Girardot 985,5 Unsolicited Proposals 1.Cajamarca - Ibagué 2.Barranquilla Santa Marta 3.Gamarra - Ocaña 4.San Roque Paraguachón 5.Malla vial del Meta Villavicencio Yopal 1215 Rumichaca pasto 1028,5 South Airports (Neiva, Popayán, Armenia) Barranquilla`s Airport 451,423 TOTAL

21 Impact on the Colombian Economy Multiplier Effect Effect Direct Effect on GDP 1,02% 1,36% 1,17% 0,76% 0,55% Indirect Effect on GDP 0,61% 0,82% 0,70% 0,46% 0,33% Total Effect on GDP 1,63% 2,18% 1,87% 1,22% 0,88% Source: National Planning Department 21

22 Impact on the Colombian Economy Potential Economic Growth 5,3% 4,6% Current Scenario 4G Scenario Source: National Planning Department 22

23 Impact on the Colombian Economy Effect on Unemployment Rate Effect on Investment Rate 8,7% 31,1% 30,1% 7,6% Current Scenario 4G Scenario Current Scenario 4G Scenario Source: National Planning Department 23

24 Socioeconomic benefits of the program Improvement in travel times Savings in vehicle operation Cali - Cartagena Medellín - Cartagena Medellín - Cali 33.33% 25.00% 46.67% Medellín - Cartagena Medellín - Cali 15.67% 29.73% Bogotá - Cartagena 26.48% Bogotá - Cartagena 16.57% Bogotá - Buenaventura 27.27% Bogotá - Buenaventura 17.32% Bogotá - Cali 26.83% Bogotá - Cali 17.71% Bogotá - Medellín 28.28% Bogotá - Medellín 18.00% Source: National Planning Department 24

25 ThankYou! National Planning Department