Colombia: Colombia: Targeting transport infrastructure

Colombia is poised to channel $100bn into an infrastructure development programme that the government hopes will underpin economic growth and produce a new transport network by the end of the decade.

The investment package will target the length and breadth of the transport and logistics sectors, including roads, rail, ports and airports, through a combination of state-funded and private ventures, together with key public-private partnerships.

The government hopes the ambitious programme will help Colombia maintain GDP growth at 6%, although some critics are already questioning whether the projects will follow in the footsteps of others that failed to get off the ground.

Finance Minister Juan Carlos Echeverry voiced his confidence that a stable political environment and strong economy, bolstered by Colombia’s efforts to rein in guerrilla activity and drug trafficking, could help the programme buck the trend of previous, unsuccessful initiatives.

“The difference today is that we have money and there is interest in private companies that never existed before,” he told the magazine Emerging Markets on March 17.

The National Infrastructure Agency (ANI), which was established by President Juan Manuel Santos at the end of 2011, will spearhead the investment drive, initially developing road, rail and maritime infrastructure, although it will also take on the role of expanding and improving airport facilities from the aviation authority Aerocivil.

The ANI has been quick to draft a plan for infrastructure developments since beginning operations on January 1, while also putting in place a specific timetable for rolling out its projects. Targets to be met by 2014 include doubling the length of four-lane highways to 2280 km and increasing the amount of operational rail track by 50%. The ANI also plans to boost airport passenger movement by 35% and drive up cargo handling capacity at the country’s ports by 50%.

According to plans, Colombia should have around 3400 km of four-lane highways, 2340 km of mainline rail track and the capacity to handle 254m tonnes of cargo through its ports by 2018, while airports are expected to be able to accommodate around 34m passengers.

The ANI’s programme expects investment activity to peak between 2014 and 2016, when it forecasts an estimated $20bn will be channelled into its projects, with a further $13bn slated to follow during the following three years.

The aviation industry should benefit almost immediately from the government’s commitment to boost infrastructure investment, following an announcement at the end of February by Santos that efforts to improve terminals and other developments would be stepped up this year. The move is seen as pivotal to the government’s target of attracting 4m tourists annually by 2014. This would be more than double the number of visitors seen in 2010.

Earlier in February, Santiago Castro, the director of Aerocivil, told local media that almost $200m would be spent this year on expanding infrastructure at airports. The funding, which Castro described as “unprecedented in this industry”, is part of a wider programme to upgrade aviation facilities nationwide and includes plans for a third runway at Colombia’s main air hub, Bogata’s El Dorado International Airport.

Alongside its plans to increase international passenger movement, Colombia is also looking to take advantage of the rise in domestic air traffic, which has seen an estimated 15m local passenger seats sold annually.

Luz María Correa, the president of Construcciones El Cóndor, acknowledged that Colombia faced major challenges with infrastructure but highlighted the opportunities that economic growth was producing for engineering firms, including her own.

“We have to keep up with all the growth in the energy, hydrocarbons and mining sectors, and that creates a very important space for infrastructure and construction firms to grow,” Correa said in an interview with Business News Americas in early February.

The ANI plans to increase project spending in stages, which will give local firms and their international partners time to adapt to an environment of heightened activity and better develop their capacity to handle large-scale assignments. The run-up period will also provide the government and various agencies with a window to fully develop plans, call tenders and ensure transparency.

If the government and its private sector partners can implement and maintain a flow of end-to-end projects, Colombia should have one of the most modern and versatile transport networks in the region by the close of the decade.