Colombian Road Concession Program 2013 - 2014
Projects and Financing Issues
Luis Fernando Andrade MorenoPresident
Agencia Nacional de Infraestructura
June, 2013
Agenda
1. The target and ground preparation2. The plan in motion: 4th generation of roadway
concessions3. The project financing challenge4. The timetable
Venezuela
Colombia
Brasil
Argentina
Perú
Uruguay
Ecuador
México
Chile
España
0 20 40 60 80 100 120 140
128
126
123
106
100
81
53
50
23
13
Poor Quality of Roadway Infrastructure
Source: World Economic Forum. The Global Competitiveness Report 2012-2013.
3
The difficulty: Infrastructure deficiency
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%Inversión Comunicaciones / PIB Inversión Energía / PIBInversión Transporte / PIB
Telecom Investment / GDPTransportation Investment / GDP
Energy Investment / GDP
4
The difficulty: Infrastructure deficiency
Source: Own calculations using DNP investment data
Historical low investment in transportation infrastructure
The actions carried out by the current Government
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Improved legal framework
Building intitutional capacity
Moving forward our infrastructure
▪ Creation of a PPP Law (Ley 1508 de 2012)
▪ Creation of the National Infrastructure Agency (ANI)
▪ Governance▪ Capability
▪ Design of a comprehensive infrastructure investment program based on PPP scheme
▪ Robust structuring ▪ Improved and standardized contracts
▪ Effective project management with better controls and monitoring systems
▪ Speeding up execution ▪ Removing bottlenecks
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 preparation2. The plan in motion: 4th generation of roadway
concessions3. The project financing challenge4. The timetable
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- US$26 billion investment program - Around 40 toll road PPP projects- Construction in over 8,100 km of national roadways in the next 8
years.
The 4G Program
How will the Government deliver on its promise of closing the infrastructure gap?
Estimated investment profile for the Program(US$ Billion of 2012)
2014 2015 2016 2017 2018 2019 2020 2021$0
$1
$2
$3
$4
$5
$6
$7
VILLAVICENCIO
CALI
Buga
PEREIRA
Sogamoso
Palo de Letras Caucasia
MONTERÍA
SINCELEJO
Carmen de Bolívar
VALLEDUPAR
BARRANQUILLA
CARTAGENA
SANTA MARTA
RIOHACHA
Paraguachon
San Roque
Necoclí
PASTO
Zipaquirá
Pamplona
Simití
Achí
San Marcos
San Pelayo
CÚCUTA
Girardot
PTO CARRENO
NEIVA
Puerto Gaitán
POPAYÁN
B/MANGA
Chachagüí
Espinal
ARMENIA
Ibagué
Pto. Salgar
Cáqueza
Calera
La Paila
Buenaventura
Santander De Quilichao
YOPAL
Tame
ARAUCA
Sopó El Secreto
MOCOA
Cartago
Planeta Rica
La Yé
Toluviejo
Cruz del Viso Carreto
Ponedera
La Paz
San JuanBuenavista
Cuestecitas
Barbosa
Aguaclara
MANIZALES Villeta
MEDELLÍN
BOGOTA
Barrancabermeja
Remedios
Pto. Arimena
El Tigre
Pto. BerríoSanta Fé de Ant.
Bolombolo
La Manuela
Camilo C
TUNJA
Aguachica
Granada
Sisga
Existing projects
4G projects
PTO CARRENO
More than 11,000 Km
25 existing projects + 40 new projects
National roadway network under Concession: Existing and Upcoming
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• Design• Rehabilitation, construction and/or improvement• Operation and maintenance• Financing
Scope
• Variable, 25 – 30 years Term
• Infrastructure units with functional independence• Size: Capex + Opex over ~US$ 50 million per UnitFunctional Units
• 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,
Payment
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4G Concession Contract: Basics
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4G Concession Contract: Risk Allocation
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• Traffic (liquidity risk)• Macroeconomic risks• Changes in law
Shared Risks• Construction (tunnels)• Land acquisition (cost overruns)• Environmental and social management
(cost overruns in environmental compensations)
• Utility networks (cost overruns)
ANI’s 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)
* Assuming concessionaire’s proper management
Agenda
1. The target and ground preparation2. The plan in motion: 4th generation of roadway
concessions3. The project financing challenge4. The timetable
Tolls60%
40%
Projects’ income (average expected distribution)
Public Contribu-tions
Investment (USD Billons)
Financial closing
26
20%
80%Debt
Equity
Investment & financing
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Note: Preliminary and estimated values, subject to modifications, adjustments and corrections.
Needs: Funding US$26 billons to be invested during the next 8 years and repaid with long term flows starting after construction phases
4G program financing needs
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Debt required for 4G concession program is large relative to the Colombian financial market
Local long term financing sources
Note: Values in USD Billions, Updated at Dec-2012
4G program financing constraints
Financing needs Commercial loans Pension Funds Insurce companies Banks' portfolio
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84
76
15
40
25% 27% 139% 52%
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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
Financial ClosingDebt commitments for 1/3 of total financing needed
- Bank loans- Loans from other
infrastructure investors
Signing of
Contract
Bidding process Pre-construction Construction O & M
Refinancing after construction phase- Asset Based Securities- Long term loans from institutional investors
End of the contractRetribution flows
according to availability*
End of construction
phase certification
Refinancing during construction phase-Securities with credit risk enhancement
-Loans from infrastructure investors/funds
* Discounts are applied up to a threshold related to the infrastructure availability (availability, service level and quality standard)
Mixed financing strategy
…
Originators SecuritiesIssuers
…
Investors
$$$$$$
UF 1
UF m
% UF 1
% UF m
Tranche j
Inv. 1
Lead Bank/Fund
Multilaterals / development Banks
…
Cession
Tranche k
Securitization structure
Underwriting commitments
Inv. n - 2
Contingent purchase
Substitution / firm commitment
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…
MODOS
• Securitization after construction is completed• Third party guarantees for credit risk during construction phase
Construction(Cost, licensing, and land availability)
• 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
Operational (Non-availability, service levels and quality
standards)
• Overcollateralization• Third party liquidity guarantees / reserve account• Securitization with tranches / subordination
Liquidity (traffic)
• 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
Early termination
Remaining Risks: Mitigation alternatives
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Agenda
1. The target and ground preparation2. The plan in motion: 4th generation of roadway
concessions3. The project financing challenge4. The timetable
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Rounds # of projects 1Q 2012 2Q 2012 3Q 2013 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014
1st Round FONADE 4 Prequalification Bidding process
1st Round PROSPERITY 5 Prequalification Bidding process
2nd Round FONADE 7 Prequalification Bidding process
3rd Round FONADE 12 Prequalification Bidding process
2nd Round PROSPERITY 4 Prequalification Bidding process
1st Round ADAPTATION FUND 3 Prequalification Bidding process
2nd Round ADAPTATION FUND 5 Prequalification Bidding process
4G Program Timetable
Thank You
www.ani.gov.co
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