Colombia’s banks are feeling the effects of the Odebrecht bribery scandal and are reluctant to get more involved in the project finance pipeline, sources told LatinFinance.
“More local players are showing pushback right now, and the impact of Rutas del Sol has left a lot of Colombian banks exposed,” one investment banker said.
The local banks that participated in the Ruta del Sol 2 toll road concession have roughly COP2.4tn ($838m) in exposure to the project. The lenders will get back roughly two-thirds of the financing from a trust fund, and the government will reimburse the rest over a number of years, the banker said.
The government’s push to repay the banks and retender the project, however, has eased the concerns of other lenders looking to finance future toll road concessions in Colombia, a second source said.
“The government faced a lot of pressure to resolve [Ruta del Sol 2],” the second source said. “Now with a scheme in place to pay the banks back, hopefully the project pipeline can move ahead.”
Clemente del Valle, CEO of the national development bank FDN, said Colombia’s 4G toll road concessions program was different from previous efforts because it was created with “strong transparency” in mind.
“[The 4G program] is much more robust, and the support from government makes the program credible,” he said. “In general, the 4G program was not that affected [by the Odebrecht scandal] because it was designed differently.”
International lenders can only provide a portion of funding in Colombian pesos, so the participation of local lenders is crucial to ensuring projects reach financial close. Del Valle said as many as 14 toll road concessions could reach financial close by the end of this year.
Odebrecht admitted late last year to paying $11m in bribes in Colombia between 2009 and 2014. The Colombian government has since made efforts to get Odebrecht out of the country, restarting the tender process for the Ruta del Sol 2 toll road and declaring a breach of contract for the Rio Magdalena waterway PPP.
President Juan Manuel Santos acknowledged last month that his 2010 presidential campaign accepted illegal contributions from Brazilian builder Odebrecht but he said he was unaware of the funding.