1. Colombian Road Concession Program Luis Fernando Andrade Moreno
Projects and Financing Issues
Luis Fernando Andrade Moreno
President
Agencia Nacional de Infraestructura
June, 2013

2. Agenda The target and ground preparation
The plan in motion: 4th generation of roadway concessions
The project financing challenge
The timetable

3. The difficulty: Infrastructure deficiency
Source: World Economic Forum. The Global Competitiveness Report

4. The difficulty: Infrastructure deficiency
Historical low investment in transportation infrastructure
Source: Own calculations using DNP investment data

5. The actions carried out by the current Government
Creation of a PPP Law (Ley 1508 de 2012)
Improved legal framework
Creation of the National Infrastructure Agency (ANI)
Governance
Capability
Building intitutional capacity
Design of a comprehensive infrastructure investment program based on PPP scheme
Robust structuring
Improved and standardized contracts
Effective project management with better controls and monitoring systems
Speeding up execution
Removing bottlenecks
Moving forward our infrastructure

6. Other Government actions
Additional actions to set up a supportive regulatory and legal framework for private investment
Infrastructure Law project in Congress
Improving regulation to mitigate risks associated to land acquisition, social and environmental management, and utility network displacements
Additional contractual provisions to facilitate resolution of Force Majeure events
Expedited conflict resolution mechanism in standard contract

7. Agenda The target and ground preparation
The plan in motion: 4th generation of roadway concessions
The project financing challenge
The timetable

8. Estimated investment profile for the Program
How will the Government deliver on its promise of closing the infrastructure gap?
The 4G Program
US$26 billion investment program
Around 40 toll road PPP projects
Construction in over 8,100 km of national roadways in the next 8 years.
Estimated investment profile for the Program
(US$ Billion of 2012)

9. National roadway network under Concession: Existing and Upcoming
VILLAVICENCIO
CALI
Buga
PEREIRA
Sogamoso
Palo de Letras
Caucasia
MONTERÍA
SINCELEJO
Bolívar
Carmen de
VALLEDUPAR
BARRANQUILLA
CARTAGENA
SANTA MARTA
RIOHACHA
Paraguachon
San Roque
Necoclí
PASTO
Zipaquirá
Pamplona
Simití
Achí
San Marcos
San Pelayo
CÚCUTA
Girardot
NEIVA
Puerto Gaitán
POPAYÁN
B/MANGA
Chachagüí
Espinal
ARMENIA
Ibagué
Pto. Salgar
Cáqueza
Calera
La Paila
Buenaventura
De Quilichao
Santander
YOPAL
Tame
ARAUCA
Sopó
El Secreto
MOCOA
Cartago
Planeta Rica
La Yé
Toluviejo
Cruz del Viso
Carreto
Ponedera
La Paz
San Juan
Buenavista
Cuestecitas
Barbosa
Aguaclara
MANIZALES
Villeta
MEDELLÍN
BOGOTA
Barrancabermeja
Remedios
Pto. Arimena
El Tigre
Pto. Berrío
Santa Fé de Ant.
Bolombolo
La Manuela
Camilo C
TUNJA
Aguachica
Granada
More than 11,000 Km
25 existing projects + 40 new projects
PTO CARRENO
PTO CARRENO
Sisga
Existing projects
4G projects

10. 4G Concession Contract: Basics
Design
Rehabilitation, construction and/or improvement
Operation and maintenance
Financing
Scope
Variable, 25 – 30 years
Term
Infrastructure units with functional independence
Size: Capex + Opex over ~US$ 50 million per Unit
Functional Units
By Functional Unit based on availability
Sources: Tolls and Government Contributions
Discounts related to availability, quality and service, capped at ~10%.
Evaluation by an experimented external auditor,
Payment

11. 4G Concession Contract: Risk Allocation Concessionaire’s Risks
ANI’s Risks
Force Majeure events
Non insurable events (e.g. natural disasters)
Land acquisition*
Social consultation*
Environmental licensing*
Traffic (Aggregated Income)
Utility networks (non identified networks)
* Assuming concessionaire’s proper management
Concessionaire’s Risks
Construction (except tunnels)
Operation and maintenance
Financing
Change in construction and operation & maintenance input prices
Land acquisition management (with control and supervision of ANI)
Insurable Force Majeure events
Traffic (liquidity risk)
Macroeconomic risks
Changes in law
Shared Risks
Construction (tunnels)
Land acquisition (cost overruns)
Environmental and social management (cost overruns in environmental compensations)
Utility networks (cost overruns)

12. Agenda The target and ground preparation
The plan in motion: 4th generation of roadway concessions
The project financing challenge
The timetable

13. 4G program financing needs Investment & financing
Needs: Funding US$26 billons to be invested during the next 8 years and repaid with long term flows starting after construction phases
Investment & financing
Equity
Debt
Note: Preliminary and estimated values, subject to modifications, adjustments and corrections.

14. 4G program financing constraints
Debt required for 4G concession program is large relative to the Colombian financial market
Local
long term financing sources
Debt financing
Bank commercial loans
Bank investments
Pension fund portfolios
Insurance company portfolios
Data is for June 2012
Note: Values in USD Billions, Updated at Dec-2012

15. 4G program financing: The proposal
Structured project financing
4G program financing will target broad participation: Banks, multilateral institutions, development banks, institutional investors and private equity funds
Government is prioritizing the role of long term investors (institutional investors):
Long term repayment flows and demand risk coverage
Mixed project funding:
Soft mini-perms loans and operating asset securitization

16. Mixed financing strategy
Financial Closing
Debt commitments for 1/3 of total financing needed
Bank loans
Loans from other infrastructure investors
Refinancing after construction phase
Asset Based Securities
Long term loans from institutional investors
Bidding process
Pre-construction
Construction
O & M
Signing of Contract
End of construction phase certification
End of the contract
Retribution flows according to availability*
Refinancing during construction phase
Securities with credit risk enhancement
Loans from infrastructure investors/funds
* Discounts are applied up to a threshold related to the infrastructure availability (availability, service level and quality standard)

17. Securitization structure
Underwriting commitments
Originators
Issuers
Securities
Investors
UF 1
Tranche j
Inv. 1
% UF 1 …
Inv. n - 2 … … …
Cession
Lead Bank/Fund
Contingent purchase
Tranche k
Multilaterals / development Banks
Substitution / firm commitment
UF m
% UF m
$$$
$$$ 17

18. Mitigation alternatives
Remaining Risks:
Mitigation alternatives
Securitization after construction is completed
Third party guarantees for credit risk during construction phase
Construction
(Cost, licensing, and land availability)
Predetermined discount caps affecting repayment flows
Financing structure and sizing according to the perceived volatility from availability payments
Strong insurance coverage requirements
Recurrent non-availability of infrastructure as cause for early termination of the contract
Operational
(Non-availability, service levels and quality standards)
Overcollateralization
Third party liquidity guarantees / reserve account
Securitization with tranches / subordination
Liquidity (traffic)
Adequate and timely causes for early termination
Repayment of investments and expenses are covered by predetermined liquidation formulas
Predetermined contractual terms and procedures for takeover rights by creditors
Early termination
MODOS

19. Agenda The target and ground preparation
The plan in motion: 4th generation of roadway concessions
The project financing challenge
The timetable

20. 4G Program Timetable 1st Round FONADE 4 1st Round PROSPERITY 5
Rounds
# of projects
1Q 2012
2Q 2012
3Q 2013
4Q 2012
1Q 2013
2Q 2013
4Q 2013
1Q 2014
1st Round FONADE 4
Prequalification
Bidding process
1st Round PROSPERITY 5
2nd Round FONADE 7
3rd Round FONADE 12
2nd Round PROSPERITY
1st Round ADAPTATION FUND 3
2nd Round ADAPTATION FUND

21. Thank You www.ani.gov.co Twitter @ANI_Colombia Facebook