IFC Partitions Colombia Tollroad Concession

The IFC has decided to break up an up to $2bn concession for Colombia’s Ruta del Sol tollroad into three pieces to facilitate bidding and eventual financing for the landmark project. Worsening financing conditions, especially for cross border financing, are a significant contributor to the strategic shift for the project, being structured by the IFC’s local branch, say executives that plan on bidding. The Colombian government is now expected to contribute a majority of the capital and operational manpower to the first and most challenging portion of the road – the stretch between Bogota and La Dorada, which crosses mountain ranges and requires tunnels and elevated sections of road. According to one bidder’s estimates, the first section could consume as much as half of the total cost of the project, or somewhere around $1bn. The remaining 2 sections – the La Dorada-Magdalena and Magdalena-Santa Marta stretches – will be awarded to 2 winning consortia, which will be responsible for sourcing their own financing for the concessions. “I expect the funds will come from the local banks and pension funds,” says Mario Dib, CFO of Odinsa, which is considering a bid. Local pension funds have been working with regulators for over two years to set up a framework permitting them to invest in infrastructure projects, namely the Ruta del Sol. A local bond would be the likeliest vehicle to do so. The turmoil has also led to a delay in the release of the projects’ statistics and critical documents to bidders which was most recently expected by December. One bidder now says he expects them out by February. As a result of the delay, bidding consortiums have yet to be formalized. Local IFC officials did not return calls seeking comment.