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Very interesting. $1.9 billion in new tenders to be issued before year end sounds very promising.
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-----Original Message-----
From: Eric Schwerin <eschwerin@rosemontseneca.com>
Date: Sat, 17 Sep 2011 15:48:48
To: Hunter Biden<hbiden@rosemontseneca.com>; <jnevergole@africa-bd.com>; Michael Muldoon<mmuldoon@rosemontseneca.com>; Rob Walker<rwalker@rosemontseneca.com>
Subject: Colombia’s infrastructure: Bridging the gap
s | The Economist


http://www.economist.com/node/21529036

Bridging the gaps


ARTICULATED lorries must take turns to pass one at a time over the narrow steel bridge spanning the Sumapaz river in the town of Melgar, south-west of Bogotá, Colombia’s capital. The bridge carries the main road from the Pacific port of Buenaventura to central and northern Colombia. Transporters loaded with Great Wall pickups coming from China cross paths with coking coal on its way to the United States, Peru and Mexico. This bottleneck will be eased later this month, when a 4.5km (2.8-mile) dual-carriageway bypass with wider bridges will open. But across the country the “monumental backwardness” of Colombia’s transport network—as Juan Martín, president of the Colombian Infrastructure Chamber, puts it—is perhaps the biggest obstacle to economic growth.

The costs of Colombia’s deficient infrastructure—which came 79th of 139 countries’ networks ranked by the World Economic Forum—are massive. Moving goods from inland cities to a port can be more expensive than shipping them from the port to a market halfway around the world. Gerardo Duque, a lorry driver, says driving the 410km from Bogotá to the south-western city of Cali can take 14 hours “on one of the better routes”. As a result, exporting a standard shipping container costs $1,770 in Colombia, against $1,480 in Argentina. Luis Carlos Villegas, the head of the national industry group, likens the infrastructure deficit to a 10-15% tax. And government planners say that resolving it could raise annual GDP growth by a full percentage point.

Colombia’s wrinkled topography has always made transport difficult. Most of the population is concentrated in three mountain chains, and much of the flatter area is clothed in jungle. But politics—corruption, a guerrilla war and governments with other priorities—have been just as much of a problem. Transport investment rose from 0.7% of GDP in 2004 to 1.6% last year, but then slowed in the first quarter of 2011. The Inter-American Development Bank recommends at least 4%.


Juan Manuel Santos, who became president last year, has vowed to do better. Some increase in infrastructure spending was to be expected after a series of floods late last year. But Mr Santos’s agenda goes far beyond the $2.2 billion he has allocated for reconstruction. His government has announced a new national infrastructure agency and passed a ten-year, $55 billion investment plan. It would double the length of Colombia’s dual-carriageway roads, continue upgrading Bogotá’s airport, revive railways and expand shipping by boat. At least half the money is forecast to come from the private sector. Last month Mr Santos announced that tenders for 19 projects worth $1.9 billion will be opened by the end of the year.

Roads are the first order of business. A top priority is linking Medellín, Colombia’s second city, to Pacific and Caribbean ports. The current design of four connector highways envisages 900km of new roads, 600 bridges and 131 tunnels.

Colombia also has international infrastructure obligations. In 2000 the 12 South American countries launched a regional integration plan that included 33 projects in Colombia, a strategic crossroads in the Americas. Among them is a trade corridor between Tumaco in Colombia and Belém in Brazil. Its route includes an unpaved track that locals call the “trampoline of death”, running from Pasto, capital of the Nariño department, to Mocoa in the Andean foothills. Today its 78km take more than three hours to traverse, as gushing mountain streams cross it and continue down sheer cliffs into gorges. A new $376m road safe for lorries is set to open in 2016.

The plan’s second focus is waterways. The Magdalena river was once Colombia’s main economic artery, and is easily accessible from both Bogotá and Medellín. One big barge can move the same amount of cargo as 75 articulated lorries. But 900km will have to be dredged to make the river fully navigable, which would quintuple its shipping capacity. The government is consulting on the project with HydroChina, a state-owned Chinese firm. It is also planning to dredge a series of access channels for ports, and build a railway that will transport coal from central Colombia to the Caribbean harbour of Santa Marta.

With the economy growing at over 4% and foreign capital pouring in, funding these projects is not a problem. Rather, it is ensuring they are built on time, to budget and with high quality. Germán Cardona has spent most of his first year as transport minister trying to fix existing contracts, many of which had bad or nonexistent designs and questionable concession deals. The 576km Bogotá-Buenaventura highway involves 16 different contracts. According to Mr Cardona, all but one have had problems. The consortium hired to build the stretch between Bogotá and Girardot included a firm whose three principals are currently in jail on fraud, bribery and other charges. The 125km were supposed to be ready last year, but are now scheduled to be finished by the end of 2012.

Corruption and inefficiency are endemic in Colombia, as in most of Latin America. But the country has recently overcome far graver problems. The legacy of Álvaro Uribe, Mr Santos’s predecessor, was crushing the FARC guerrillas and making it safe for Colombians to leave their homes. Mr Santos’s may be helping them to get where they’re going.


Eric D. Schwerin
Rosemont Seneca Partners, LLC
1010 Wisconsin Ave., NW
Suite 705
Washington, DC 20007
(202) 333-1880
eschwerin@rosemontseneca.com
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