MegaProject 875: Colombia cancels Odebrecht road contract
- CSS Constructores
- Episol SAS (Corficolombiana)
- Odebrecht - Odebrecht Transport
This article is part of a daily series of MegaProjects articles. If you want to know more about PPP projects with a considerable size visit our MegaProjects section. You can receive them by email on a daily basis.
The Colombian National Infrastructure Agency (ANI) has announced the cancelation of a road contract with the Brazilian firm Odebretch, the toll road's majority shareholder.
After several weeks of negotiations, ANI reached an agreement for the cancelation of the contract with the concessionaire of Ruta del Sol II highway. The trade and industry regulator, SIC, issued a resolution ordering the immediate termination of the contract for the concession.
Colombia's public prosecutor said it has evidence that Odebrecht paid bribes to win the contract. According to the public prosecutors, there is evidence that Odebrecht paid US$6.5 million in 2009 to former transportation vice minister Gabriel García to win the 25-year PPP contract.
The project involved the design, construction and operation of the second section of the Ruta del Sol highway project. This second section will connect Puerto Salgar with San Roque. The project involved repair, upgrade and widening (into a four-lane highway) work.
The contract was awarded in January 2010 to Concesionaria Ruta del Sol S.A.S., which comprises Norberto Odebrecht, Odebrecht Investimentos em Infra-estructura, Estudios y Proyectos del Sol S.A., Episol and CSS Constructores. The Brazilian builder owns 62% of the SPV Ruta del Sol S.A.S.
Construction works started in May 2011 and as of December 2016, Ruta del Sol has built 52% of the 528 Km segment. The total investment for the project was US$1.89 billion.
The Ruta del Sol Highway accommodates 20 thousand vehicles every dayand is the most important highway in the country.
Numerous projects with Odebretch participation has been canceled recently:
In January 2017, Peru’s government announced that it was cancelling a US$7 billion pipeline project led by Odebrecht. The Peruvian government also said the Brazilian company would have to shut down all of its operations in the country and leave.
In September 2016, Brazil terminated the PPP involving the Corridor PR-323 project. The concessionaire, which included Odebrecht Transport SA, failed to fulfill the concession contract. The biggest challenge faced by the concessionaire was to obtain funding for the project. Odebrecht's involvement in corruption investigations has also influenced the decision.
In January, Odebrecht recognized its participation in illicit actions in its business activities and apologized for its mistakes.