Infrastructure Opportunities in Colombia

Transcription

1 KPMG ADVISORY SERVICES LTDA Infrastructure Opportunities in Colombia GLOBAL INFRASTRUCTURE October 2013 kpmg.com.co 1 1 1

2 Contents 1. KPMG Services 2. Colombia as an investment destination 3. PPPs in Colombia 4. Infrastructure projects summary a. Roads b. Airports c. Railways d. Public transportation e. Ports f. Fluvial g. Social h. Energy i. Water and sewerage j. Pipelines k. Mining 5. Financing market in Colombia 6. KPMG Global infrastructure, awards and recognition 7. Colombian experience, CVs and contact 2011 KPMG Auditores Consultores Ltda., sociedad de responsabilidad limitada chilena y una firma miembro de la red de firmas miembro independientes de KPMG afiliadas a KPMG International Cooperative ( KPMG International ), una entidad suiza. Todos los derechos reservados.

3 1. KPMG Services 2011 KPMG Auditores Consultores Ltda., sociedad de responsabilidad limitada chilena y una firma miembro de la red de firmas miembro independientes de KPMG afiliadas a KPMG International Cooperative ( KPMG International ), una entidad suiza. Todos los derechos reservados.

4 KPMG services We advise clients on all facets of the infrastructure lifecycle. From strategy and development, through to procurement, financing, development, operations and investment Integrated advice across the asset lifecycle Strategy & development Planning, feasibility and business case development Clarity of needs, objectives and constraints. Strategy, policy and regulatory formulation and planning. Infrastructure plans. Feasibility assessment. Risk analysis. Funding options analysis. Business Case/Investment Case development. Procurement strategy advice and options analysis. Procurement & financing Bid structuring and creating value for money Advice on tender process. Commercial structuring. Request for tender and tender response documents. Funding strategies and procurement of financing. Development of contractual documentation. Financial modelling. Negotiation of commercial terms. Contractual and financial close. Delivery & construction Achieving efficiency in construction Monitoring and control of risks, costs and benefits. Governance and contract management. Operational readiness assessment and assistance. Project oversight. Project management. Tax capital allowances maximisation. Investment Maximising value in the secondary market Investment/dive stment of infrastructure assets. Tax planning and structuring. Financial, tax, pensions and operational due diligence. Valuations. M&A Advisory. Pensions. Investment strategy. Refinancing. Restructuring. Audit of funds and project companies. Operations & performance Achieving positive performance Asset management. Cost takeout. Contract monitoring. Tax compliance. Change of ownership due diligence. Development of tax efficient structures. Stakeholder engagement. Retendering. Privatisation. Our teams can provide you with specialist advisory (M&A, due diligence, valuations), tax, audit, accounting and compliance related assistance through the life of your infrastructure projects and programs, or as a fundamental part of your business. Our professionals can bring to you the benefit of their extensive local and global experience advising government organizations, infrastructure contractors, operators and investors. KPMG firms can help set a solid foundation at the outset and combine the various aspects of your infrastructure projects or programs from strategy, to execution, to end-of-life or hand-back. Our teams can help you ask the right questions and find strategies tailored to meet the specific objectives you have set for your business.

5 KPMG services (2) We have deep sector specialisation and experience across infrastructure. We truly understand the issues that are relevant and have experience in proactively driving positive solutions Sectors Transport Social infrastructure Energy and natural resources Communications Urban transit. Traffic management. Rail. Roads. Airports. Ports. Healthcare. Education. Leisure. Housing. Urban regeneration. Government accommodation. Prisons. Power generation and transmission. Water and waste management Solid waste. Mining. Oil and gas storage and transportation. Telecommunications infrastructure. National broadband. Major Games. Cities

6 KPMG services (3) We also consider the particularities of the different cash flows of the project, taking into account the different currencies and the facilities for handling in the domestic and foreign markets. KPMG has the support of professional personnel in tax and accounting related issues, to adjust the structure to the local legislation and to the available possibilities in the market. Our objective is to support the client in the investment to be made, accompany the investor throughout the different required stages, and efficiently structure the financing that would lead to a financial close within an optimal time-frame. Our role as independent advisors Infrastructure projects require a strong dedication for the design of the Business Plan and its subsequent execution, which implies support throughout the public bidding process, design and negotiation for eventual structure of the financial close, and the necessary management and coordination of the different tasks to be conducted by the other advisors of the project. Likewise, the characteristics of the advisory require an exhaustive level of dedication from the team assigned to the project and the presentation of a great quantity of economic-financial documentation to the lender entities which also requires a high level of expertise. The KPMG Infrastructure team has a large experience in the financial advisory of infrastructure projects in various sub sectors. Main characteristics of our advisory are as shown in the table on the next slide 6

7 2. Colombia as an investment destination 2011 KPMG Auditores Consultores Ltda., sociedad de responsabilidad limitada chilena y una firma miembro de la red de firmas miembro independientes de KPMG afiliadas a KPMG International Cooperative ( KPMG International ), una entidad suiza. Todos los derechos reservados.

8 Colombia as an investment destination Why invest in Colombia? 10 reasons to invest in Colombia 1. Investment grade - Colombia gained investment grade given by the three main risk rating agencies (Standard and Poor's, Moody's and Fitch). 2. Leading economy in HSBC has ranked Colombia at number 26 of the 30 largest economies in the world. It has also forecasted that Colombia will grow at a faster pace than other countries to Prospects for investment - according to the report made by the newspaper The Independent in the United Kingdom, Colombia is ranked as one of the two new countries in Latin America with the best prospects for investment and development. 4. Excellent macroeconomic performance - in 2009 while world GDP fell 2.1%, the Colombian economy grew 1.5% and in 2010 increased 4.3%, higher than the world economy, which was 3.4% in the same year. Colombia will expect GDP growth of 4.4% in Attractive market - In terms of Purchasing power parity (PPP), Colombia is the 28th largest economy in the world and 3rd in Latin America. The country's GDP has doubled from and although it is not a part of the OECD countries it may be expected to become one of them on the long run. (CIA World Factbook) 6. Dynamic external sector and growth - since 2001, Colombia has presented a 522% growth in Foreign Direct Investment (FDI) from USD 2,542 million to USD 15,823 million in Safety conditions - according to the International Institute for Management Development (IMD), Colombia ranks second in Latin America in terms of personal safety and adequate protection of private property, after Chile. 8. A country that protects environment - according to Yale University, Colombia is the tenth country in the world and the first in the region to protect the environment. 9. Competitive advantages - third most "friendly" to do business and more reformer in Latin America, as well as the fifth and first in the world and region respectively that protect investors, according to the World Bank Doing Business Government commitment in offering investment incentives and stability for investors: - 18 International Investment Agreements with 50 countries and 16 agreements to prevent double taxation. - Among the most competitive Free Trade Zones of Latin America: income tax of 15%, allows local market sales, no payment of customs taxes (VAT, tariffs) and allowsthe benefits of international trade agreements (except Peru). - Colombia offers legal stability contracts to ensure investment projects % deduction for investments in scientific and technological development in the income tax. - Income tax deduction of 200% of payments made to employees with disabilities work. Source: Proexport 8

9 Colombia as an investment destination (2) General aspects Over the past few years, Colombia has experienced significant improvement in its macroeconomic performance, internal security and stability. As a result, social indicators have improved dramatically; Colombia has achieved solid structural growth given an increase in the investment rate which in turn, generates higher productivity levels; In 2011, Colombia was awarded investment grade rating from all the main rating agencies in the world; Colombia is aggressively negotiating free trade and investment agreements in order to expand its markets; The Government is fully committed to reassuring favorable conditions so as to improve domestic and foreign investment. This is reflected in the establishment of free trade zones and legal stability contacts. GDP In the last decade, Colombia has shown a balanced trend in GDP growth; In 2008, the year of the international economic crunch, Colombia had relatively strong economic growth in spite of the external conditions. The latter was evident as according to the figures released by the International Monetary Fund (IMF) for the year 2009 showing economic growth for the year of 1.5%; As of May 2013, the IMF forecasts a GDP growth of approximately 4.4% for Colombia. The agency suggests that the European debt crisis is unlikely to affect the GDP and that inflation is likely to be kept under control. 8,0% 7,0% 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% GDP Growth 6,7% 6,9% 5,3% 4,7% 4,3% 5.9% 4.0% 4,4% 3,9% 3,5% 1,5% Source: IMF International Monetary Fund 9

10 Colombia as an investment destination (3) Trade operations Exports have increased approximately 253.0% since 2004, rising from about USD 17 billion to USD 60 billion in 2012, generating a trade surplus in recent years; In 2009, trade in Colombia was limited by political conflicts with some of its commercial partners, resulting in almost no trade with Venezuela. In spite of these problems, the behavior of the balance of trade was positive and has remained at a good economic level; As of the end of year 2012, the balance of trade was positive by USD million which may represent competitive Colombian products to foreign markets. Balance of Trade USD Million * Source: DANE Statistics National Department *as of January 2013 Exchange rate behavior Succeeding a strong devaluation in the 90s, the Colombian Peso appreciated against the USD, mainly due to the country s economic recovery; This phenomenon is expected to continue in the upcoming years due to the weakening market value of the US dollar along with the enduring European economic crisis; The average exchange rate (representative market rate) for the year 2012 was of 1,198. The exchange rate for April 1st, 2013 was 1,832. End of year official exchange rate $3.000 $2.500 $2.000 COP/USD $1.500 $1.000 $500 $ * Source: Colombian Central Bank *As of April 1 st,

11 Colombia as an investment destination (4) Foreign direct investment Increased confidence in Colombia is reflected in the growing FDI flows into the country. FDI is currently about 5 times higher than it was at the beginning of the decade; Most foreign investment is concentrated in the mining and oil sectors. Investment in communication and transportation services, as well as the manufacturing sector, have great potential for growth in the upcoming years; FDI inflows to Colombia were USD 13,438 million for the year 2011, a higher figure when compared to the one registered in 2010 which was USD 6,758 million. Nonetheless, 2012 had the highest FDI for the period analyzed, reaching USD 15,823 million. This increase was triggered mostly by a general investment increase in the petroleum industry of the country, which accounted for 33.98% (USD 5,376.7million). Annual Total FDI This increase was driven by the purchase of Bavaria by SAB Miller for approximately USD 7.8 billion. USD Million Main investors in Colombia (2012) Chile USD 3,074 million (56.2%); Panama USD million (12.79%), England million (10.49%) and Anguilla USD million (8.79%). Source: Colombian Central Bank Ever since 1994, Foreign Direct Investment in Colombia has been aimed mostly at the petroleum and mining sectors followed by manufacturing. The graph below indicates the investment participation of the main sectors for the year The main foreign direct investors in Colombia are Chile, followed by Panama, England and Anguilla. The graph below lists the main FDI sources for the year FDI by sector FDI by country Agriculture Construction Utilities Trade Transportation Financial Services Manufacturing Mining Petroleum 0,7% 1,5% 5,2% 10,1% 10,9% 10,9% 12,9% 14,2% 34,0% CANADA LUXEMBURG BRASIL UNITED STATES ANGUILLA ENGLAND PANAMA CHILE 3,9% 4,4% 6,3% 8,6% 8,8% 10,5% 12,8% 56,2% 0,0% 10,0% 20,0% 30,0% 40,0% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% Source: Colombian Central Bank Source: Colombian Central Bank 11

12 Colombia as an investment destination (5) Doing business The 2013 Doing Business Report, ranks Colombia as the 45th best country to do business, out of 183 countries listed in the report. Additionally, the same ranking registers Colombia as the third Latin American country for the same purpose. Moreover, according to the 2010 Financial Development Report, one of Colombia s best features is the low cost of doing business which heightens the countries attractiveness to international investors; The 2010 Financial Development Report ranks Colombia as the 6th country with the highest strength of investor protection as well. The countries ranked before Colombia are Singapore, Hong Kong and Malaysia. The Latin American country closest to Colombia in the ranking is Peru, which is ranked on the 13 th place. Latin America - Best countries to do business Country World ranking 2013 Chile 37 Peru 43 Colombia 45 Mexico 48 Panama 61 Costa Rica 110 Argentina 124 Brazil 130 Ecuador 139 Venezuela 180 Source: Doing Business 2013 Inflation Colombia s Central Bank, fulfilling its constitutional role, has enforced strict monetary policies in order to reduce inflation and control price variations; Inflation has been under strict control for over a decade, reflecting a one digit, sustainable rate; On January 2013, analysts forecasted an end of the year inflation of 2.83%, which is, only a little higher from December Inflation as of December 2012 Percentage 10,00% 8,00% 6,00% 4,00% 2,00% 0,00% Source: DANE Statistics National Department 12

13 Colombia as an investment destination (6) Income tax rate These are the income tax rate for companies from January 1, 2013 Type of entity Tariff National institutions and similar entities 25% Foreign companies that acquire their income through branches or permanent establishments 25% Companies and foreign entities where income are not attributable to branches or permanent establishments 33% Foreign capital investment portfolio for different dividend income 14% Foreign capital investment portfolio for different dividend income, if investors have a tax haven impeachment 25% Foreign capital investment portfolio for dividend income 25% Special regime free trade zone 15% Free Trade Agreements (FTA) In force Signed but not in operation In negotiation Future Andean Community of Nations (since 1969) Ecuador, Peru and Bolivia G-2 (since 1995) Mexico Mercosur (since 2005) Argentina, Paraguay, Uruguay and Brazil) European Union EFTA (November 2008) Iceland Panama Turkey Japan Costa Rica Dominican Republic Australia New Zealand Chile (since 2009); and Guatemala, Honduras and El Salvador (since 2010) USA (2012) Canada Iceland, Liechtenstein, Norway y Switzerland International Investment Agreements (IIA) and Double Taxation Agreements (DTA) In Force Double Taxation Agreements (DTA) are designed to protect investors from being taxed twice when the same income is taxable in two countries. Currently, there are 8 DTAs (3 in force and 5 signed but not in operation). International Investment Agreements (IIA) protect investors from expropriation and discrimination from other national or foreign investors. Additionally, these treaties establish responsive procedures for dispute settlement between investors and the host country. Currently, there are agreements in force with 10 countries. Source: Ministry of trade, industry and tourism 13

14 3. PPPs in Colombia 2011 KPMG Auditores Consultores Ltda., sociedad de responsabilidad limitada chilena y una firma miembro de la red de firmas miembro independientes de KPMG afiliadas a KPMG International Cooperative ( KPMG International ), una entidad suiza. Todos los derechos reservados.

15 PPPs in Colombia Private participation in infrastructure The process of attracting private participation helped the advance in: 1- Transportation: construction, operation and maintenance of part of the public transportation infrastructure (25 road concessions, 17 airport concessions and some port and railway concessions). 2- Telecommunications: development of the cell-phone communications service, the opening of the long distance market and the improvement of the television offer through open and close TV concessions. 3- Mining and energy: improvement in the service and assurance of the supply in the long term, through the sell of assets in the sector and the entrance of private operators. 4- Urban transportation: development of efficient transportation systems that give the citizens safe opportunities in mobility. The goal is to attract private investment to new sectors (healthcare, education, prisons, defense, agriculture, urban development, culture and public buildings). Public-private partnerships in Colombia (PPP) Law 1508 of 2012 The law is enforceable in all those contracts where the private investor develops any of the following activities: 1- Design and construction of infrastructure and its utilities. 2- Construction, repair, improvement, or equipment of infrastructure (these activities must involve the operation and maintenance of the infrastructure). 3- Infrastructure for public services. There are two kinds of PPPs: 1- Public initiative: for the selection of the PPP projects of public initiative, the prequalification system may be used in accordance with the rules, a list of pre-qualified bidders will be made via a public invitation. 2- Private initiative: the PPPs from a private initiative are divided in two kinds (projects that require public funding and those which do not.) o o Private initiatives that do not require expenditure of public funds: individuals can structure public infrastructure projects or provide associated services, at their own risk, assuming all the costs of structuring and presenting it confidentially to the entity. The stages are: pre-feasibility and feasibility. Private initiatives that require outlays of public funds: this kind has the same stages, plus a public bid where if an agreement is achieved between the competent public agency and the originator of the initiative, the Public entity will hold a public bid to select the contractor. Prior to the PPP law, all infrastructure projects in Colombia were made under the Law PPP law is overruled by law number one, which regulates port terminals 2- PPP law is overruled by mining law, which regulates mining activities Source: DNP Planning National Department 15

16 PPPs in Colombia (2) Legal and regulatory framework of the PPP law General provisions 1- The law applies to all sectors minimum projects investment: USD 1.7 million. 2- Maximum term including extensions 30 years (the term can be extended only if there is a previous favorable concept from CONPES (Political economy and Social National Congrees). 3- Limit to additions and extensions of contracts with public budget 20%. 4- Nation s payments subject to service availability. Resources Selection process Public initiative Private and/or public Public bidding Private initiative Private + max. 20% public Public bidding 100% private Abbreviated selection PPP projects common provisions 1- Project funds are managed through SPV. 2- Creation of a new database of PPP projects. 3- Proper budget management to guarantee future payments. 4- A sub commission for monitoring the rules of the PPP law is created. Decree 1467 of 2012 and decree 100 of 2013 ruling Colombia s P3 law General implications of a public initiative process Selection procedure: public tender, referred to in Article 30 of Law 80 of 1993 and its regulations. Selection factors: the competent State entity, will verify the fulfillment of the requirements and conditions, to determine the bidders may continue in the selection process. The best offer for the entity is that which, according to the nature of the contract represents the best offer based on the application of the criteria set out in paragraph 12.2 of Article 12 of Law 1508 of 2012 or in the best cost benefit to the entity. The analysis to establish the best cost benefit to the Company, shall take into account minimum and additional technical and economic aspects that the bidder must meet. Contract value: the value of the contracts of public-private partnership projects of public initiative includes the estimated investment budget which corresponds to the construction, repair, improvement, equipment, operation and maintenance of the project as appropriate. Studies to open selection process for project implementation: the State entity responsible must have the required studies. However, if the nature and scope of the project makes some of the studies are not required, the State entity shall determine which studies are needed to open the respective selection process. Prequalification systems: for projects which estimated cost is more than seventy thousand minimum monthly wages (COP 566,664), the State entity responsible might use prequalification systems prior to the opening of the selection process, in order to use private sector expertise to improve the definition conditions for project implementation. 16

17 PPPs in Colombia (3) Prequalification: the invitation to participate in the prequalification includes at least the following information: 1- Project description and feasibility studies that support the project. 2- Time limit and physical location or address to submit the expressions of interest. 3- Show the minimum enabling requirements that are required for prequalification. Public initiative Formation of the list of prequalified: conformed by minimum two and maximum ten potential bidders and will be published in the SECOP. If there are more than ten potential bidders who meet the enabling requirements, the ten will be chosen through draw, as established in the respective specifications. Project idea Feasibility studies Social -economic studies Technical, legal and financial structuring Contracting form justification Revised by the National Planning Department and the Ministry of Finance Public PPP Requires public funding Request for fiscal and future years approval Opening of the tender process Source: DNP Planning National Department Does not requre public funding PPP opening of the tender process General implications of a private initiative process The newly issued Decree established that the prefeasibility stage must provide historic figures, the government economic projections and infield inspections deemed necessary for the project. The purpose of this stage is to propose, quantify and compare technical alternatives that allow for the correct feasibility analysis of the project. The proposal of a private initiative will have to provide to the national entity at least the following information: 17

18 PPPs in Colombia (4) Stage 1 requirements: Name and project description Project scope Project specifications Estimated cost Sources of financing Stage 2 requirements: Project originator Project Project risk Financial analysis Updated studies Private initiatives can be presented prior to the issuance of the pre-feasibility studies made by the structuring party (government side) of the project. This enables a private initiative to be presented at the same time the government is contracting the structuring process of a project. Query with other entities and third parties Pre- feasibility presentation Concept Concept (3 months) Not of public interest Initiative rejected Qualifies as public interest Required studies Proof of financial capability Investment experience Deadline to submit feasibility studies (2 yrs. maximum) Feasibility presentation Public audience Risk and contingencies approval Proposal evaluation (6 months). The entity may ask for complementing studies during three month more Acceptance Yes Conditions (2 months) Minister council approval No No obligation for the Governmental entity Public funding Private funding Government entity Investment Project (SMMLV) % Bonus to % to % Over % Public tender (6 months) Brief selection (2-4 months) Proposal originator Contract award Right to improve Source: DNP Planning National Department 18

19 4. Infrastructure projects overview 2011 KPMG Auditores Consultores Ltda., sociedad de responsabilidad limitada chilena y una firma miembro de la red de firmas miembro independientes de KPMG afiliadas a KPMG International Cooperative ( KPMG International ), una entidad suiza. Todos los derechos reservados.

20 Infrastructure projects summary The table below presents an overview of the current status of infrastructure projects in Colombia. The table is organized by project status as described below: Under study Represents projects that are currently being studied, but have not yet entered the development and structuring stage. Tenders launched to structure the PPP bids Represents projects that will likely be tendered after they are structured. Being structured Represents projects that are currently being structured in order to begin bidding process. In tender process Represents projects that are currently in the expression of interest, prequalification or in the bidding process. Overview of infrastructure projects in Colombia Status Sector Total Under study Est. investment (USD million) Airports 1 22 Rail 5 8,001 Public transportation 6 5,010 Ports Fluvial Energy Social 1 26 Water and sew erage 4 2,274 Total in studies 29 16,108 Being structured Roads 14 11,299 Airports 1 Not defined Public transportation Energy 6 2,966 Social Water and sew erage Total being structured 31 15,429 In tender process Roads 16 14,500 Airports Fluvial Total in tender process 21 15,400 Total 81 46,937 20

21 a. Roads

22 Roads Overview Roads in Colombia Road and highway concessions are classified into four categories: (1) national road network not under concession (12,436 km), (2) national road network under concession (6,035 Km), (3) secondary road network (88,348 km)) and (4) tertiary road network (35,438 km). Overview of highway concessions in Colombia Concession procurement emerged as an alternative mechanism for financing the creation, maintenance, improvement and operation for road infrastructure. Before the modification of the Colombian constitution in 1991, the infrastructure investment came only from the government. After 1992, private investment was included as an alternative for these kind of projects. In Colombia, given the concentration of the economic activity and its irregular geography, the infrastructure has a big impact on business costs and competitiveness. According to specialists and government institutions, there is a lag in regulatory framework investment for basic infrastructure. In 1992, the government initiated a concession program that has evolved in multiple generation of concessions. The concession contracts are generally divided into generations. The 1 st, 2 nd and 3 rd generations have already been developed; the 4 th generation is under a conformation process. As of December 2010, during the past 10 years, the kilometers under concession grew by 157% in 10 years and the highways under concession increased from 11 to 25 during the same period. In 2011, the government structured the 4 th generation of concessions, in order to improve and expand the road network in Colombia. Road and highway concessions Network road Highw ays roads under concession Kilometers under concession 2,002 6,035 Four lane highw ays kilometers built Source: ANI - Infrastructure National Agency 22

23 Roads Overview (2) Several analyses about development in Colombia have argued that the deficit in infrastructure investment, explains the lag of the country in this matter. The National Development Plan (PND-Plan Nacional de Desarrollo) recognizes the importance of involving more actively the private sector in investment and in the conceptualization process of infrastructure needs. The latter also establishes the importance of developing schemes of Public Private Partnerships (PPPs) and explore alternative mechanisms to channel private investment and efficient management in the modernization, construction, operation and / or maintenance of public infrastructure. The PND specifically addresses three areas of action: (i) Facilitation and promotion of private investment in infrastructure (strengthen technical legal and financial structuring of projects), ( ii) Public Private Partnerships as a mechanism for public infrastructure development (encourage the use of new schemes of project management in the context of the APP), and (iii) Continuation and strengthening program for private participation in infrastructure (concessions). More than 6,000 Km of roads will be awarded through concessions in order to complete the national network. The National Infrastructure Agency (ANI) has scheduled concessions for planned and potential projects representing investments of USD 42,667 million to be bid on during the period * Source: Infrastructure projects. ANI Infrastructure National Agency * To be tendered 23

24 Roads Secondary market During the first generation of concessions there were 13 road projects awarded, with a initial investment of USD 869 million. These projects had several modifications explained by the lack of experience of the Government in these kind of projects. Highways First generation of concessions In 1992 the Government launched the program for road concessions in order to face the challenges of globalization, economic openness and financial crisis. In this stage,13 road projects were awarded for a total length of 1,649 kilometers, which included construction of 230 kilometers and maintenance of 1,527 kilometers. The estimated investments at that time was USD 869 million. Out of the 13 contracts, 7 were awarded through direct contracting and 6 through public bidding. Concessions of the first generation Concessionaire Owners Project Award date Length (km) Initial investment (USD) Proyectos de Infraestructura S.A. Corficolombiana S.A. Buga-Tuluá-La Paila 12/11/ Concesion Santa Marta - Paraguachon S.A. Carreteras Nacionales del Meta Consorcio La Calera * Concesionaria Vial de los Andes S.A. Concesion Sabana de Occidente S.A. Consorcio Via al Mar Union Temportal Devinorte Concesiones CCFC S.A. Valorcon S.A. (45%), Grupo Odinsa (41%), Concay (4%), Others (10%) Grupo Odinsa, Confianza S.A., Peajes S.A., Sociedad Operadora de Vias S.A., Conconcreto, Mauricio Jaramillo, Jairo Correa Gomez Cromas S.A., Incoequipos S.A., Consultoria Colombiana S.A., Banco del Estado. Corficolombiana S.A., EPIAANDES, Dragados y Construcciones. Santa marta-rioacha- Paraguachón 02/08/ Malla vial del Meta 02/08/ Los Patios-La Calera-Guasca y Salitre-Sopo-Briceño 02/08/ Bogotá-Caqueza-Villavicencio 02/08/ Mario Huertas Bogotá-Siberia-La Punta-El Vino 02/08/ Edgardo Navarro Vives (50%), Consultores del Desarrollo (50%) Cartagena-Barrranquilla 24/08/ Mincivil (55%), Equipo Universal (16%), Castro Tcherassi (13%), Civilia (8%), Desarrollo vial del norte de Bogota 24/11/ Others (8%) Proyectos de Infraestructura (50%), Colcorp S.A. (26%), Conconcreto (24%) Fontibón-Facatativa-Los Alpes 30/06/ Consorcio Solarte Ingenieros Constructores Devimed S.A. Luis Carlos Solarte and Carlos Alberto Solarte Procopal S.A.,Conconcreto S.A., Mario Huertas, Castro Tcherassi-Equipos Universal, Wackenhut de Colombia, Cano Jimenez y Fidiciaria Industrial Girardot-Espinal-Neiva 10/07/ Desarrollo vial del oriente de Medellin y Rio Negro 23/05/ Autopista del Cafe S.A. Odinsa, Megaproyectos Armenia-Pereira-Manizales 21/04/ Consorcio Concesion Cienaga- Barranquilla Edgardo Navarro Vives Barranquilla-Cienaga Not available Total 1, Source: CEPAL Serie de recursos naturales e infraestructura N 138, ANI Infrastructure National Agency * This concession ended, so it was returned to the INVIAS. A characteristic of these projects in this first stage was the high number of modifications, explained by the lack of experience of the Government in these kind of projects. The weaknesses in this stage were: Delay in disbursement; Delay in the approval of the environmental licenses; Changes in the initial designs; Changes in land inventory; and Relocation and removal of toll booths. 24

25 Roads Secondary market (2) In the second generation, 2 road projects were awarded with an initial estimated investment of USD 674 million. This generation improved both institutional coordination as well as technical, financial and legal mechanisms. Highways Second generation of concessions The guidelines established in this new generation, mainly established a better redistribution of risk and higher levels of detail in the road designs. The guidelines established for this generation phase stated that contractors should complete the achievement of environmental licenses and land records before construction began. The second-generation road concessions improved both institutional coordination as well as technical, financial and legal mechanisms for these kind of projects. The disadvantage in this phase was the mechanism of selection for the firms in the bidding process, which ultimately led to inappropriate incentives. Also, there were significant delays in the road construction progress. During this generation, 2 road projects were awarded for a total length of 1,041 kilometers. The estimated investment at that time was USD 674 million. Concessions of the second generation Concessionaire Owners Project Award date Length (km) Initial investment (USD) COMMSA (Consorcio vial del ACS Dragados, SACYR, Julio Gerlein, El Vino-Tobiagrande-Puerto Magdalena Medio)* Castro Tcherassi, Equipos Universal Salgar-San Alberto 24/12/ Union Temporal Desarrollo Vial del Valle del Cauca y Cauca Hermanos Solarte (59%), Sideco (21%), Pavimentos Colombia (20%) Malla vial del Valle del Cauca 29/01/ Total 1, Source: CEPAL Serie de recursos naturales e infraestructura N 138, ANI Infrastructure National Agency * The contract expired due to breach of contract. There was a strong resistance of the Colombian financial sector to support these concessions, because of the design problems of the first generation, the economic situation and the financial sector crisis in El Vino San Alberto Project Valle del Cauca Project 25

26 Roads Secondary market (3) In the third phase, 14 road projects were awarded, for an initial estimated investment of USD 4,433 million. Highways third generation of concessions During , the government continued promoting the privatization of road infrastructure projects. The third generation started in 2002 and the Government designed a program which included 14 road projects under concession. In this stage there were awarded 3,567 kilometers and the estimated investment at that time was about USD 4,433 million. Concessions of the third generation Concessionaire Owners Project Award date Union Temporal Concesion Vial los Comuneros * Consorcio Solarte Ingenieros Constructores Concesion Autopista Bogota- Girardot S.A. Concesionaria de Occidente S.A. Desarrollo Vial de Nariño S.A. - DEVINAR Autopistas de Santader S.A. Autopistas de la Sabana S.A. Concesionaria San Simon S.A. Concesionaria San Rafael S.A. Autopistas del Sol S.A. Concesión Vial de Cartagena S.A., Valores y Contratos S.A., Alvarez y Collins S.A. Luis Carlos Solarte, Carlos Alberto Solarte Alejandro Char Chaljub, MNV S.A., Gas Kpital GR S.A, Vergel y Castellanos Ingenieros Asociados V y C ltda, Álvarez Collins S.A. Icein S.A. (22%), Mario Alberto Huertas (22%), Pavimentos de Colombia (22%), Concay S.A. (22%), Aguiler Construcciones S.A. (10%), Estudios Tecnicos S.A. (2%) Concay S.A, Incoequipos S.A, Ingenieros Constructores GAYCO S.A, A & D Alvaro & During S.A, Nacional de Pavimentos LTDA, CEI S.A, Estudios Tecnicos S.A, TIN LTDA, JMV Iingenieros Contratistas LTDA, Inversiones Rodriguez y Rincon LTDA Cicon S.A KMA LTDA, Constructora EMMA LTDA, Bernardo C. y CIA.LTDA, Tecnica Vial S.en C.A, CI Procesadora de Asfaltos en C.A, CI GRODCO S. en S.A Ingenieros Civiles, Garzon Ingenieros y Asociados LTDA, Vanegas y Garzon LTDA Obras Especiales Obresco (28%), CI Grotco (16%), Tecnica Vial (12%), Others (44%) Aseo Técnico S.A, Codesa S.A, Constructora Colpatria S.A, Constructora San Isidro S.A, H.B Estrcuturas Metálicas S.A, Latinco S.A, Mincivil S.A, Sadelec S.A, Termotecnia Coindustrial S.A, Topcp S.A CICÓN S.A, KMA Ltda, Concesiones y Construcciones Ltda, Constructora EMA Ltda, Técnica Vial Sdad. EN C.A, CI GRODCO Sdad. EN C.A, Obras Especiales OBRESCA S.A, Constructora VIALPA S.A, Tecnoconsulta Ltda, Change Consulting Group Colombia S.A Length (km) Initial investment (USD) Zipaquira-Palenque 27/12/ Briceño-Tunja-Sogamoso 15/07/ Bogota-Girardot 01/07/ Pereira-La Victoria 02/08/ Rumichaca-Pasto-Chachagui 21/11/ Area metropolitana de Bucaramanga Area Metropolitana de Cucuta y Norte de Santander 06/12/ Cordoba Sucre 02/02/ /06/ Girardot-Ibague-Cajamarca 13/07/ Ruta Caribe 28/07/ Consorcio Vial Helios Consecionaria Ruta del Sol S.A.S YUMA Concesionaria S.A. Consorcio Vias de las Americas S.A.S. PSF Carlos Alberto Solarte (25%), Conconcreto (25%), CSS Constructores S.A. (25%), IECSA S.A. (25%) Odebrecht Invet Infra (37%), Estudios y proyectos del Sol EPISOL (33%), Constructora Norberto Odebrecht (25%), Constructores S.A. (5%) Impregilo (40%), Infracon (29%), Capital privado RDS (17%), Grodco S en S.A (13.80%), Tecnivial S.A (0.50%) Odinsa (33%), Valorcon (33%), Construcciones el Condor (33%) Ruta del Sol - Sector I 15/12/2009 Ruta del Sol - Sector II 15/12/2009 1,071 2,600 Ruta del Sol - Sector III 22/07/2010 Transversal de las Americas 05/08/ Total 2,844 4,433 Source: CEPAL Serie de recursos naturales e infraestructura N 138, ANI Infrastructure National Agency * This concession ended, so it was returned to the INVIAS. 26

27 Roads Primary market (1) 1- FONADE Group 1: corresponds to the Honda Puerto Salgar Girardot section. Honda - Puerto Salgar - Girardot Road Length (km) Existing tolls New tolls AADT 2015 Est. Investment (USD million) Variante Flandes - Girardot Not available 72 Girardot - Guataqui , Guataqui - Cambao , Cambao - Puerto Bogota , Puerto Bogota - Puerto Salgar , Honda - Puerto Salgar , Source: ANI Infrastructure National Agency Intervention Construction of one vehicular bridge and their approaches, on the Magdalena River (Flandes bridge 400 m), completing a double lane path and the mentioned road connection Construction of a road connection (or variant) between Girardot Flandes (Cundinamarca) Construction of two road exchangers: one at the intersection of the road connection Girardot Nariño with the Chicoral variant and the second, on the road Girardot Nariño Guataquí Cambao Construction of a variant in Cambao Improvement of the road between Girardot Cambao Puerto Bogota, as needed Flandes K Girardot K Nariño K Cambao K Improvement of the road between Puerto Bogota and Puerto Salgar Construction of an exchanger in Puerto Bogota. Rehabilitation and maintenance of the road between Puerto Salgar La Dorada Honda (Route 45) Construction of the Puerto Salgar bridge over the Magdalena river and its approaches (320 m) Pto. Bogotá K Pto. Salgar K Honda K Existing road New road Exchanger Bridge Source: ANI National Infrastructure Agency Current Status In tender process 27

28 Roads Primary market (2) 2- FONADE Group 1: corresponds to the Neiva Girardot section. Neiva - Girardot Road Length (km) Existing tolls New tolls AADT 2015 Est. Investment (USD million) Girardot - Castilla Castilla - Neiva Source: ANI Infrastructure National Agency Intervention Improvement, rehabilitation and maintenense of the road Double-lane road San Rafael Espinal (7.78 km) Construction of a double line variant in Espinal Construction of a double line Espinal El Guamo (11.17 km) Construction of a double line variant in El Guamo Construction of a double line El Guamo Saldaña (9.2 km) Construction of a double line variant in Saldaña -Construction Bridge Saldaña river (100 m) Construction of a double line Saldaña Castilla (9.9 km) Construction Bridge Patá river (120 m) Construction Bridge Magdalena river (130 m) Girardot K Espinal K El Guamo K Saldaña K Castilla K Neiva K Existing road New road Exchanger Bridge Source: ANI National Infrastructure Agency Current Status Expression of interest 28

29 Roads Primary market (3) 3- FONADE Group 1: corresponds to the Santana Pitalito - Neiva section. Santana - Pitalito - Neiva Road Length (km) Existing tolls New tolls AADT 2015 Est. Investment (USD million) Neiva - Campoalegre , Campoalegre - Pitalito , Pitalito - Santana , Source: ANI Infrastructure National Agency Intervention Double-lane road Neiva Campo Alegre Construction of intersection Vin Los Cauchos Construction of a variant in Campo Alegre Construction of a bridge in the variant Campo Alegre Improvement of the road between Campo Alegre and Pitalito Construction of a variant in Hobo Construction of a bridge in the variant Hobo Bridge between Hoho and Gigante Construction of a variant in Gigante Construction of a bridge in the variant Gigante Construction of a variant in Timaná Construction of a tunnel after Pitalito Neiva K Los Cauchos Campo Alegre K Hobo Gigante Timaná Improvement of the road between Pitalito and Santana Construction of a variant in Mocoa New road between Pitalito San Agustin Pitalito K Mocoa Santana K Existing road New road Exchanger Bridge Tunnel Source: ANI National Infrastructure Agency Current Status Expression of interest 29

30 Roads Primary market (4) 4- FONADE Group 2: corresponds to the Mulalo Loboguerrero Cali section. Mulalo - Loboguerrero - Cali Road Length (km) Existing tolls New tolls AADT 2019 Est. Investment (USD million) Mulalo - Loboguerrero , Loboguerrero - Cali , Source: ANI Infrastructure National Agency Intervention Double-lane road Mulaló - Loboguerrero Two tunnels, the first one crossing the Alto de Cresta de Gallo de 3.2 kms and the second one in Loboguerrero de 5.4 kms. These will be added to the short tunnels that complete an entire length of 12 kms 31 bridges with distances that may be higher than 200 mt and that add up to 2.75 kms in total Construction of intersection Vía Panorama Mulalo K Rehabilitation and maintenance of the road between Loboguerrero Dagua Cali Double lane construction of the trench in Pavas-La Cumbre, pedestrian crossings and lightweight traffic. Noise reduction barriers, and visual pollution reduction is also required Construction of intersection vía Cali- Dagua Loboguerrero Loboguerrer o K Cali K Existing road New road Exchanger Bridge Tunnel Source: ANI National Infrastructure Agency Current Status In tender process 30

31 Roads Primary market (5) 5- FONADE Group 2: corresponds to the Popayán- Santander de Quilichao section. Popayán - Santander de Quilichao Length Existing New AADT Est. Investment Road (km) tolls tolls 2015 (USD million) Santander de Quilichao - Popayán , Source: ANI Infrastructure National Agency Intervention Double-lane road Santander-Popayán Improvement, rehabilitation and maintenance of the existing road Santader de Quilichao K Popayán K Existing road New road Exchanger Bridge Source: ANI National Infrastructure Agency Current Status Expression of interest 31

32 Roads Primary market (6) 6- FONADE Group 2: corresponds to the Rumichaca-Pasto section. Rumichaca - Pasto Road Length (km) Existing tolls New tolls AADT 2015 Est. Investment (USD million) Rumichaca - Pasto Source: ANI Infrastructure National Agency Intervention Double-lane road Rumichaca-Pasto Improvement, rehabilitation and maintenance of the existing road Rumichaca K Pasto K Existing road New road Exchanger Bridge Source: ANI National Infrastructure Agency Current Status Expression of interest 32

33 Roads Primary market (7) 7- FONADE Group 3: corresponds to the Bogota eastern corridor. Bogota eastern corridor Road Length (km) Existing tolls New tolls AADT 2015 Est. Investment (USD million) Briceño - Sopo 13, Guasca - Sesquile 2, Sopo - El Salitre - La Calera , Patios - La Calera 10, Bogota - Choachi 1, La Calera - Choachi , Choachi - Caqueza Variante Choachi , Source: ANI Infrastructure National Agency Intervention Briceño La Calera Double-lane road Briceño- Sopo and improvement of existing road Exchanger in Briceño connecting Tunja and Sogamoso. Rehabilitation El Salitre Guasca Exchanger La Calera - Sopo Briceño Km 0 Sopo Km 4 Salitre Stretch Briceño Caqueza 82 Km Guasca Patios La Calera Improvement, rehabilitation and maintenance of the existing road La Calera Choachi - Caqueza Improvement of the existing road 9 viaducts totaling 794 mt Construction Choachí variant Bogotá Cr 7a Calle 85 Patios La Calera Km 29 Construction of stretch Km 6-12 La Calera - Choachi Choachi Km 57 Source: ANI National Infrastructure Agency Caqueza Km 87 Current Status In tender process 33

34 Roads Primary market (8) 8- FONADE Group 3: corresponds to the Bogotá- El Tablón section. Bogotá - El Tablón Road Length (km) Existing tolls New tolls AADT 2015 Est. Investment (USD million) Bogotá - El Tablón ,466 1, ,074 Source: ANI Infrastructure National Agency Intervention Improvement, rehabilitation and maintenance of the existing road Improvement, rehabilitation and maintenance of the existing Tunnel (Boquerón) Double-lane road Bogotá El Tablón Bogotá K El Tablón K Existing road New road Exchanger Bridge Source: ANI National Infrastructure Agency Current Status Expression of interest 34

35 Roads Primary market (9) 9- FONADE Group 3: corresponds to the Villavicencio- Arauca section. Villavicencio - Arauca Road Length (km) Existing tolls New tolls AADT 2015 Est. Investment (USD million) Villavicencio - Cumaral Cumaral - Aguazul Aguazul - Yopal , Source: ANI Infrastructure National Agency Intervention Double-lane road Villavicencio-Cumaral Improvement, rehabilitation and maintenance of the existing road Villavicencio K Improvement, rehabilitation and maintenance of the existing road Cumaral K Double-lane road Aguazul-Yopal Improvement, rehabilitation and maintenance of the existing road Aguazul K Yopal K Existing road New road Exchanger Bridge Source: ANI National Infrastructure Agency Current Status Expression of interest 35

36 Roads Primary market (10) 10- FONADE Group 4: corresponds to the Cartagena Barranquilla Malambo section. Cartagena - Barranquilla - Malambo Length Existing New AADT Est. Investment Road (km) tolls tolls 2015 (USD million) Cartagena - Barranquilla , Barranquilla - Malambo , Source: ANI Infrastructure National Agency Intervention Construction of a second lane Viaduct construction in Cienaga de la Virgen Existing bridges rehabilitation Rehabilitation and maintenance of the road between Cartagena and Barranquilla Cartagena K New road construction Pedestrian crossings construction Exchanger Malambo Soledad Exchanger with La Cordialidad road Exchanger with Galapa Barranquilla K Malambo K Existing road New road Exchanger Bridge Source: ANI National Infrastructure Agency Current Status In tender process 36

37 Roads Primary market (11) 11- FONADE Group 4: corresponds to Puerta del Hierro Palmar de Varela and Carreto Cruz del Viso sections. Puerta del Hierro Palmar de Varela and Carreto Cruz del Viso Road Length (km) Existing tolls New tolls AADT 2015 Puerta del Hierro Carmen de Bolivar Camen de Bolivar - Cruz del Viso Source: ANI Infrastructure National Agency Est. Investment (USD million) Carreto - Palmar de Varela , Intervention Improvement, rehabilitation and maintenance of the road Construction Carmen de Bolivar variant (double line) Exchanger Carmen de Bolivar Puerta del Hierro K Improvement, rehabilitation and maintenance of the road Carmen de Bolivar K Improvement, rehabilitation and maintenance of the road Cruz del Viso K Carreto K Palmar de Varela K Existing road New road Exchanger Bridge Source: ANI National Infrastructure Agency Current Status Expression of interest 37