China's Sinohydro in talks for Odebrecht stake in Colombia river project

BOGOTA (Reuters) - Chinese construction company Sinohydro is negotiating with Odebrecht to take over the Brazilian company’s stake in Colombia’s Magdalena River navigability project, a deal that could save the $873 million contract, a government official said.

The corporate logo of Odebrecht is seen in a construction site in Caracas, Venezuela January 26, 2017. REUTERS/Carlos Garcia Rawlins

Power China is interested in becoming involved through its Sinohydro unit, Luis Fernando Andrade, president of Colombia’s National Infrastructure Agency, told Reuters on Thursday.

“The only way out for this contract is another company taking it over,” he said. Odebrecht received the concession in 2014.

The company is trying to divest its 87 percent stake in the Navelena consortium, which is tasked with dredging the river to increase its cargo capacity, after allegations by U.S. prosecutors that Odebrecht paid hundreds of millions of dollars in bribes in 12 countries.

The project “needs a company that’s not Navelena and has nothing to do with Odebrecht, and that is what we’ve been working on,” said Andrade.

The latest negotiations come after Japan’s Sumitomo Mitsui bank pulled $250 million in financing from the project in January as the Odebrecht scandal was blowing up.

“Power China, a very important company ... already has history of working on the Magdalena River through Sinohydro,” Andrade said.

Sinohydro was disqualified from the bidding for the contract eventually won by Navelena. Andrade said he did not remember why.

The Navelena consortium, which also includes Colombia’s Valorcon, has until Feb. 22 to find alternative financing, or the contract will be scrapped, according to government agency Cormagdalena, which manages the project.

Officials at Odebrecht and Cormagdalena said they had no information about the talks. Sinohydro did not respond to messages from Reuters seeking comment.

The government would have to temporarily take over dredging works if the contract is liquidated, Andrade said. Construction was originally slated to begin in June 2016.

The dredging is set to increase cargo transport fivefold on a 256-km (159-mile) section of the river to some 10 million tonnes by 2029 to reduce freight costs and help increase exports by commodities producers and agricultural companies.

U.S. prosecutors have accused Odebrecht of paying bribes connected to projects in countries including Brazil, Argentina, Colombia, Mexico and Venezuela between 2002 and 2016.

Accusations swirled this week that the 2014 re-election campaign for President Juan Manuel Santos received $1 million from the company. He has denied any money was received.

Additional reporting by Helen Murphy and Julia Symmes Cobb; Writing by Helen Murphy; Editing by Julia Symmes Cobb and Lisa Von Ahn