1. Infrastructure and Port Development in Central America: Role of the IDB Esteban Diez Roux London March 5 th 2014

2. Infrastructure and Port Development in Central America: Role of the IDB http://www.iadb.org The Inter-American Development Bank Discussion Papers and Presentations are documents prepared by both Bank and non-Bank personnel as supporting materials for events and are often produced on an expedited publication schedule without formal editing or review. The information and opinions presented in these publications are entirely those of the author(s), and no endorsement by the Inter-American Development Bank, its Board of Executive Directors, or the countries they represent is expressed or implied. This presentation may be freely reproduced.

3. Infrastructure and Port Development in Central America: Role of the IDB  General Vision of the IDB  Port Sector in Central America  Procurement Table of Contents

4. Infrastructure and Port Development in Central America: Role of the IDB Main source of financing for the sustainable development of Latin America and the Caribbean  Founded in 1959, the IDB is the oldest and largest regional development bank.  48 members: 26 borrowing members and 22 non-borrowing members.  From 1961 to the end of 2013, the IDB has approved US$188.62 billion in loans and guarantees.  The IDB obtains its own financial resources from its 48 member countries, borrowings on the financial markets, and trust funds that it administers, and through cofinancing ventures.  The IDB’s debt rating is AAA, the highest available.

5. Infrastructure and Port Development in Central America: Role of the IDB  Public Sector lending with Sovereign Guarantee  Investment Loans  Policy Based Loans  Emergency Loans  Non-reimbursable support:  Technical Cooperation: technical studies & project preparation:  InfraFund; FIRII Fund; AquaFund; SECCI Funding  Donor Trust Funds (e.g. Korea Technology & Innovation | Korea Poverty Reduction)  ESW: Economic Sector Work  Non-Sovereign Guarantee lending  Private Sector Loans  Public sub-national entities qualified for NSG  Inter-American Investment Corporation  Multilateral Investment Fund Modalities of Bank Support

6. Infrastructure and Port Development in Central America: Role of the IDB 2013 US$14.0 billion in approved loans and guarantees. Loans by topic. 1961-2012 Loans by region, 2013 (US$14.0 billion) CAN $2.15 B 15% CCB $0.37 B 3% CSC $6.16B 44% CID $4.72B 34% CID $4.72B 34%

7. Infrastructure and Port Development in Central America: Role of the IDB  Typical Projects Road expansion/rehabilitation Public transportation (BRTs, Subways) Ports, airports  Typical Procurement Aspects Civil works (infrastructure construction, rehabilitation, tunneling, bridges, ports ) Buses, rolling stock, equipment Technical consulting services  Highlights of 2013 Transport Lending in CA Nicaragua: Support for Transport Sector III (US$ 91.5 M) Costa Rica: Transport Infrastructure Program (US$ 450 M) El Salvador: Mesoamerican Pacific Corridor Improvement Program (US$ 115 M) Honduras: PPP Atlantic Corridor Supplementary Financing Program (US$ 17.2 M) Transport Operations Approvals in Transport 2009-2013 (US$ million)

8. Infrastructure and Port Development in Central America: Role of the IDB  General Vision of the IDB  Port Sector in Central America  Procurement Table of Contents

9. Infrastructure and Port Development in Central America: Role of the IDB Central America and Dominican Republic  8 Countries –7 on main land  18 ports (in red below)  Total Population: 52.8 million  Area: 570,546 sq km  Most populous country: Guatemala (14 million)  Least populous: Belize (327,719)  Largest country: Nicaragua  Smallest country: El Salvador Ports in the Study

10. Infrastructure and Port Development in Central America: Role of the IDB  Two large transshipment hubs in the DR and Panama  2 of 11 Atlantic ports offer direct service to Asia and 7 of 11 offer direct service to Europe  All Pacific ports must transship through Panama to connect to ports in the Atlantic and vice versa.  Most trade goes to the US and Europe  Poor road infrastructure and difficult geography raise appeal of sea shipping Current Caribbean Port System Actual liner services that visit two or more ports among those in the study

11. Infrastructure and Port Development in Central America: Role of the IDB Connectivity network for ports in Study Estimation of the weekly number of TEUs that needed to be moved by sea in 2010 between countries in this study

12. Infrastructure and Port Development in Central America: Role of the IDB Most trade is with countries out of the region

13. Infrastructure and Port Development in Central America: Role of the IDB Infrastructure Limitations  Only four ports capable, based on berth depth, to receive Post-Panamax Vessels (two in Panama one in El Salvador, and one in the DR)  Only four ports can receive Panamax vessels (two in Costa Rica, one in Guatemala and one in Honduras.  Five ports don’t have operational cranes, including one of the Post Panamax ports (Rely on geared ships)

14. Infrastructure and Port Development in Central America: Role of the IDB Impact of the canal  Little impact on ports in the study  They need to improve port efficiency, integration with customs and other services and modernize their infrastructure  Might need to accommodate bigger feeder vessels  Better road connectivity  There are plans for transshipment ports in Costa Rica, El Salvador, Guatemala and Honduras  There will potentially be a mega hub on the Atlantic side –Likely at Colon in Panama

15. Infrastructure and Port Development in Central America: Role of the IDB Opportunities for Investment  La Union – El Salvador –Awaiting a concession  Puerto Santo Tomas de Castilla – Guatemala –Evaluating the development of strategic projects such as the improvement of the access route for the port (access directly to the main road bypassing the town), moving the cruise terminal outside the current cargo areas, and the expansion of the current container and grains terminal.  Puerto Limon-Moin –An investment of USD 80 million is planned for the modernization of the current passenger infrastructure and the development of new areas for touristic purposes once new container terminal is complete.  Puerto Acaluja – El Salvador –Planning to extend C berth by 90 meters, increase some berths’ depth to 15 meters, develop a new container berth directly connected to the yard, and acquire a new Post Panamax crane.

16. Infrastructure and Port Development in Central America: Role of the IDB Opportunities for Investment  Puerto Cortes – Honduras –Planning to have a new container terminal to be given as a concession to a private operator for its development and management.  Puerto Castillo – Honduras –Planning to expand the current terminal by adding 100 m of berth for more flexible dockage operations. Several investors have showed interest in the port for activities such as ethanol production, exporting of iron scrap, a refinery, and a tourist terminal.  Puerto Manzanillo – Panama –Planning a USD 300 million investment to build 3 new berths and add 38 ha of additional container storage in order to reach a total annual capacity of 4 million TEUs and enabling the port to handle new-panamax vessels.  PSA Panama International Terminal – Panama –Planning 800 m of additional berth, expansion of the container yard and 10 new post-panamax STS cranes. This expansion would provide 2 additional new post-panamax berths and increase the port’s capacity to 2 million TEUs.

17. Infrastructure and Port Development in Central America: Role of the IDB  General Vision of the IDB  Port Sector in Central America  Procurement Table of Contents

18. Infrastructure and Port Development in Central America: Role of the IDB Investment loans (SG): execution  Standard project procurement:  Civil works  Equipment  Consulting services: technical & institutional strengthening  Competitive bidding  Turnkey vs. split contracts/works  Contact Executing Agencies (Government Ministries) for procurement requirements, bidding documents, contract information, procedures & payments  Actively engage local embassy to identify opportunities  Upstream pipeline projects

19. Infrastructure and Port Development in Central America: Role of the IDB Business opportunities IDB (preparation) ≈ 5%  Technical Cooperations (TC), pre-investment:  Contracts with IDB, mainly consulting services, support of project preparation (small/moderate value and short term), usually include feasibility studies, due diligence, etc. In-country (execution) ≈ 95%  Loans and or TCs  Competitive biding processes with IDB borrowing country as the client (larger value, longer term, formal competitive bids, e.g., goods, services, civil works, equipment, etc.)  Subcontracting with other firms (as partner, as a joint venture, as a supplier) Where to start (companies)?  Contact Executing Agencies (Government Ministries) for procurement requirements, bidding documents, contract information, procedures & payments  Actively engage local embassy to identify opportunities

20. Infrastructure and Port Development in Central America: Role of the IDB Inter-American Development Bank www.iadb.org Esteban Diez Roux  esteband@iadb.org esteband@iadb.org Transport Division Infrastructure and Environment Department