Central management: A new agency is guiding progress in the sector

As part of the overhaul in the country’s approach to infrastructure development, the National Infrastructure Agency (Agencia Nacional de Infraestructura, ANI) was created in November 2011. ANI was established to replace the National Concessions Institute, which had fallen into disrepute following several corruption-linked accusations. The new agency is a decentralised entity, operating under the purview of the Ministry of Transportation, but with financial and technical autonomy.

KEY RESPONSIBILITIES: ANI is responsible for the planning, structuring, execution, administration and evaluation of concessions and other public-private partnerships (PPPs) in transportation projects. It is the go-to entity for infrastructure projects, launched by both private and public initiative. “The new agency is the first step towards making infrastructure one of the engines for Colombian development,” President Juan Manuel Santos declared at ANI’s opening.

ANI is also counted upon to coordinate between stakeholders and iron out any issues that, in the past, have led to lengthy delays and, in some cases, abandonment of projects. Key challenges include obtaining environmental licences, access to lands and conflicts with local communities. ANI is tasked with ensuring resolution of these matters at the start of the tender process, as stipulated by the new PPP framework.

The agency has had a busy first year opening the bidding processes on the first four projects of the fourthgeneration concessions plan, worth some COP44trn ($26.4bn). In early February 2012, ANI announced the start of the prequalification stage on a 152-km highway between Barranquilla and Cartagena, a 205-km connection between the central municipalities of Girardot and Puerto Salgar, a 90-km stretch from Mulaló to Lobo Guerrero in the country’s south-west and a road linking the central towns of Cáqueza, La Calera and Sopó.

ADDITIONAL FUNDS: Another priority for the new agency is the development of infrastructure bonds. In a bid to encourage pension funds to diversify investments beyond government debt and increase private sector financing of infrastructure development, the government has ambitious plans to launch the first bonds before the end of 2015. ANI, in collaboration with the Ministry of Finance, has taken the lead on structuring the assets and, eventually, issuing them on the capital market. While the terms and conditions were still on the drawing board at the time of publication, the government has indicated the duration of bonds will likely be 25 years, with yields close to those on fixed-income instruments.

The bonds are expected to generate an estimated $20bn. Though interest from the financial industry has been positive, ANI is faced with overcoming significant levels of scepticism about investing in public infrastructure projects due to past negative experiences of these projects. Key challenges include regulations limiting manoeuvrability in the event of a default on interest or capital payments as well as high levels of risk during the construction stage of public roads. Moreover, some investors have expressed doubts about ANI’s abilities to structure the bonds in a manner that entices domestic financiers, as they are a novelty to the financial industry in general and to ANI in particular.

PROVING ITSELF: While ANI has its work cut out for it in terms of maintaining the pace behind the country’s ambitious road development plans, it must also try to earn the trust of domestic and foreign investors. So far, however, the agency is reputed for its business-minded approach and commitment to transparency. Investors are gradually noticing the significant improvements compared to the former public procurement agencies.