Aruba has found a model for future public-private partnerships in its first-ever PPP to reach financial close.

The Green Corridor project, to expand several roads to four-lane highways, renew more than 20kms of motorway and build bike paths, is being carried out by Colombian infrastructure firm  Odinsa. The construction company mandated Deutsche Bank as the pair set out to implement a PPP structure in Aruba, which is part of the Kingdom of the Netherlands.

The German lender last year provided a $58.7 million loan in a structure that borrows heavily from a model already in place in Holland. 

The loan covers capital expenditure on the Green Corridor PPP and maintenance costs over the 20-year concession. The highway concessionaire benefits from the Green Corridor having no toll system, thus eliminating traffic risk. David López, Odinsa’s international investment manager, says that was critical in netting financing from Deutsche Bank.

“There is a security package demanded by banks that need government guarantees,” he says. “This is a stable sovereign with support from the Netherlands with little risk of default.”

Atypical of a PPP, the Aruban government assumes the construction risk and will make annual payments to Odinsa, should the company meet its construction targets. Odinsa has two years to build the Green Corridor and then holds contracts to maintain and expand it over 18 years.

The novel financing requires the Aruban government to pay Odinsa gross availability payments annually in Aruban florins, which are pegged to the dollar. The design, build, finance and maintain contract, inherited from the Netherlands, has already been applied to the country’s second road PPP.

“This was a challenge that we succeeded with, and already the next PPP is being done” López says. “[Green Corridor] was a new contract for Latin American and Caribbean deals that involved replicating a structure in a different jurisdiction.”

The Green Corridor marked Odinsa’s debut in Aruba and the company’s third concession in the Caribbean, following two projects in the Dominican Republic. LF

WINNER: Green Corridor

PROJECT: Green Corridor


FINANCING TYPE & SIZE: $58.7 million loan

BANK: Deutsche Bank

LAW FIRMS: Allen & Overy, Mayer Brown