OBG talks to Eleuberto Antonio Martorelli, President, Odebrecht Colombia

Interview: Eleuberto Antonio Martorelli

Concessions for $28bn of road projects are in hand. How would you assess the process for the fourth generation of concessions going forward?

ELEUBERTO ANTONIO MARTORELLI: Since the beginning of this process, Odebrecht has been among the companies that has made observations to the Colombian government about the imbalanced structure of risk allocation.

While it is true that the government has made significant efforts to improve the quality of projects with the fourth generation of concessions, and has made a commitment to respond to requests from the private sector, there are still several key areas for improvement. Most importantly, we do believe that the prequalification process could have been managed differently by the National Infrastructure Agency (Agencia Nacional de Infraestructura, ANI).

For example, the ANI has allowed companies with broadly diverse technical and financial backgrounds to be placed together. The ANI should have instead adapted the project requirements to candidates with the size and experience to apply. We also believe that any responsibility for risk in legal changes that may affect a project should be allocated to the grantor, as the private sector is unable to absorb the impact that legal changes may have on a project.

Indeed, we are discussing a 25-year project: in that length of time we will certainly witness changes in government, and also in fiscal and tax policies. We cannot, under any circumstances, assume such risks such as those, unless these conditions are improved.

What is the current status of the Ruta del Sol project stand, and how can the government help to resolve any disputes arising from the project?

MARTORELLI: Odebrecht delivered 100 km of the Ruta del Sol highway in 2013, namely the portion for which we were then responsible. Since then we have continued to meet the scheduled deadlines despite some ongoing problems. It is important to realise that there have been some points of conflict with communities. Some of them could be solved by the joint presence of all private and public stakeholders, as in any public-private partnership. The presence of the ANI during these negotiations made it easier to resolve disputes in a timely manner.

To what extent will the new Law of Infrastructure and Transportation be able to successfully resolve any remaining issues to do with the projects?

MARTORELLI: The Law of Infrastructure and Transportation is part of Colombia’s effort to facilitate the execution of projects. It defines the roles of each entity in the process, encouraging a more efficient dialogue between national, municipal and local entities, as well as environmental and mining agencies.

Therefore, the enactment of this law represents a breakthrough, while the approval of the National Economic and Social Policy Council’s recommendation documents similarly represents a significant step forward. However, having said that, the contracts for the fourth generation of concessions should also reflect these improvements in the new regulations. Environmental studies, right of way negotiations, opposition from local communities and interference by utilities should all be priorities to ensure the optimal development of infrastructure.

The new Law of Infrastructure and Transportation addresses all these issues, but the challenge now is its proper implementation and execution, in order to pave the way for infrastructure development.

What kind of mechanisms are in place to facilitate the implementation of the new law?

MARTORELLI: The law has provided a proper framework, which is already a significant step. As I have said previously, the appropriate challenge at the present moment is to come up with these mechanisms. There is a ramp-up time to regulate the law and promote a true conscience at the involved entities level, searching for a common and unique goal.