US$900 million road project in Colombia reaches financial close

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US$900 million road project in Colombia reaches financial close

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The Autopista al Mar 2 (Autopistas de Urabá) project, which involves a 254km highway that will connect Cañasgordas to Necoclí, in Antioquía, a department in north-west Colombia, has reached financial close. The estimated total investment is COP2.57 trillion (US$891 million).

A consortium led by China Harbour Engineering Company (CHEC) was awarded a 25-year concession contract for the project in September 2015.

The consortium is contracted to upgrade the section of the highway between Cañasgordas and Uramita (28km); construct a new highway segment between Uramita and Dabeiba (17.7km), while operating and maintaining the existing road connection; upgrade the road linking Dabeiba to Mutatá (53km); rehabilitate the highway linking Mutatá to El Tigre (47km); and operate and maintain the existing highway between El Tigre and Necoclí (106km). 

Financiera de Desarrollo Nacional (FDN), Colombia's development finance institution, has approved COP500 billion (US$173.1 million) 17-year loan for the project. The institution has stated that this represents 25% of the project's total financing, implying that the concessionaire has secured COP2 trillion (US$692.3 million) from financiers.

FDN also disclosed that 37% of the total financing (COP740 billion (US$256.1 million) if our interpretation of FDN's statement is correct) has come from China Development Bank, which is unsurprising given that CHEC's participation in the project represents the first private investment by a Chinese company in a Colombian highway concession.

FDN is the co-lead arranger for the project's financing alongside Sumitomo Mitsui Bank Corporation (SMBC). The Japanese bank approved a financing package for the project in January 2017, but did not disclose the amount approved or the term.

FDN is also guaranteeing the equity contributions of Termotécnica and Unica, which hold 5% and 15% shares in the concessionaire, respectively. The approved bank guarantee covers up to COP57.28 billion (US$19.8 million).

The highway is scheduled to be completed in 2021. It is one of the 40 projects that comprises the 4G programme - the Fourth Generation Toll Road Concession Programme (Cuarta Generación de Concesiones), currently the largest road infrastructure programme in Latin America, spanning 7,000km and requiring around COP47 trillion (US$16.5 billion) investment. 

Several other 4G projects have reached financial close in the past year, including the Ruta al Mar, the Bogotá-Villavicencio road concession, the Girardot-Ibagué-Cajamarca (GICA) highway and the Transversal del Sisga.

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