Colombia eyes $40 billion in infrastructure flows

BOGOTA Tue Mar 29, 2011 10:45am EDT

BOGOTA (Reuters) - Colombia could see at least $40 billion in infrastructure projects within the next decade, possibly with investment funds from China, France and Spain, the country's transport minister said.

Infrastructure bottlenecks and deficiencies are seen as a major problem for Colombia, Latin America's No. 4 oil producer, as it seeks to hike key exports like crude oil, coal and coffee.

"Colombia could be surpassing $40 billion... that's long-term investment. We're talking about more or less 10 years in all sectors, rivers, roads, railways, airports, that is, all infrastructure sectors," Transport Minister German Cardona said at the Reuters Latin American Investment Summit in Bogota.

Cardona told Reuters late on Monday that he expected 30 percent to come from both local and foreign private firms.

Colombia is enjoying a resurgence in investment, especially in its booming oil and mining sectors, as bombings, kidnappings and attacks drop sharply since a U.S.-backed drive against leftist guerrillas intensified in 2002.

But choked roads, rail and ports hamper the drive to boost key exports such as coffee, coal and oil, and benefit from new markets like those in resource-hungry Asia.

Cardona said the country would issue more than 1 trillion pesos ($534 million) in tenders in a month, the majority in the roads sector, and would begin tenders for constructing and expanding Central and Carare railway projects this year.

"The government is already preparing the documents to tender the Central Railway ... Carare (railway) is another important contract, we are expecting it to be parallel or a little later (than the Central Railway)," Cardona said.

"It's giving life back to (the central) railway through a system (of) concessions where those who come and invest are going to have a guarantee from the state ... in the event that (The return) is less than expected, the government will be ready to use its own resources for what's missing."

COAL RAILS AND CHINA

China has expressed interest in investing in the Carare railway project, expanding an existing Pacific coast rail and building a so-called "dry canal" linking Colombia's Pacific and Atlantic coasts.

"Today, (China) is far ahead on a proposal for ... the structure and construction of a major railway in the west. ... the western railway itself has been a much more fluid conversation," Cardona said.

"That has an advantage in that the railroad already exists, the properties exist, networks exist, they would only have to take it from narrow gauge to standard gauge, then it is a project that from the standpoint of the environment and land has very few problems."

French companies have also shown interest in rail projects and from firms in Spain in tunnels in the mountainous nation, Cardona said, without giving any details.

Cardona said he expected port capacity to expand by about 30 percent annually and that Bogota was focused on awarding concessions for mega-ports rather than a smattering of smaller harbors.

Cardona said the government planned to rule on issues for plans to build a parallel line for the 226-km (140-mile) Fenoco railway in June. The line's shareholders are Glencore's Prodeco unit, Drummond, Vale and Goldman Sachs Colombian unit.

Those top coal producers now use the line -- which runs about 24 trains daily -- to send coal to the Atlantic coast -- the railway's expansion is seen as key to the country meeting its goal of exporting more high-quality, thermal coal.

"We're aiming in June to have a solution to at least three or four points that are the furthest apart ... and there will be points where definitely instead of building a parallel track, there will have to be other alternatives," Cardona said.

($1=1,871.37 Colombian pesos)

( Editing by W Simon )