Sep. 10, 2018
Colombia, as large as France and Spain combined, is investing heavily in its transportation infrastructure to boost economic activity nationwide.
In 2013 the World Economic Forum identified Colombia's transport infrastructure 10th out of 12 Latin American economies measured by the infrastructure quality-gap index. World Bank arm International Finance Corporation (IFC) has lent its private-sector-fostering experience to the Development Bank of Latin America (CAF) in establishing financial development institution La Financiera de Desarrollo Nacional (FDN) to promote infrastructure investment. The rest is a work in progress.
4G Hits the Road
The massive 4G infrastructure project, not to be confused with the (LTE) mobile communications standard, entailed a virtual doubling of total road length, with 8,000km of additions. Former president Juan Manuel Santos established the National Infrastructure Agency (ANI). The infrastructure route to economic growth is a familiar one, and by 2017 ANI had awarded 32 road concessions from a total schedule of 33 projects. Yet sector data reveals that, although related Law 385 of the Financial Sector Reform 2009 provided transport sector investment of up to USD14 billion, south of USD1 billion had been invested as of 2017. This contrasts markedly with the USD9 billion given to electricity and telecommunications. 4G was timed to operate according to the then-new PPP law, which sought to offer juicy opportunities to foreign private sector investors. Infrastructure concessions awarded fit into a broader strategic investment goal USD100 billion by 2021. Greater tender transparency was enabled by the contribution of the World Bank's Transport Practice and IFC's Advisory Services. Moreover, 4G was devised as a benchmark of construction standardization for better overall implementation.
Something in the Air...
Jesús Alberto Sánchez Restrepo, the General Manager Aeropuerto Olaya Herrera Medellín, explained in a TBY interview how the PPP model “has meant that the state has retained a stake in a broad spectrum of infrastructure from highways and ports to airports. Sector data indicates that 75% of airports remain state-owned, with stakes also held, as with the rest being owned by local authorities such as the Medellín airport."
...To Pave the Road?
While domestic passengers fell just over 3% in 2017, blighted by a pilot strike at premier airline Avianca, domestic air travel growth flourished over 2011 to 2017, where passenger levels soared over 60%. Yet in April, it emerged that Colombian airlines could be impacted by the mayor of Bogotá's proposed USD2.88 tax on domestic passengers traveling through El Dorado International, plus a USD5 fee for international passengers. Ironically, these taxes, are aimed at funding road infrastructure, yet could subtract from aviation's balance sheet.