21 April, 2020 Colombia

Bankability features of the 5G Concession Agreement

Banking, Finance and Capital Markets

Recently, the National Agency of Infrastructure (“ANI”) has launched the 5G program for infrastructure projects related to highways, rivers, railways and airports concessions. In accordance with the estimations of the Colombian government, the total investments for the 5G projects that will be awarded are, approximately, 4.5 billion dollars. For such effect, ANI has commenced the bidding process for the first 5G project, which tends to construct and rehabilitate the Cali-Palmira highway system. Additionally, some other projects are starting to be included in the pipeline of the 5G program as well, such as the concession for the navigability of Río Magdalena, one of the Colombian largest rivers.

The 5G program is structured pursuant to a standard concession agreement published by ANI (the “5G Concession Agreement”). In general, in our view, the 5G Concession Agreement contains many new features that enhance the bankability of the 4G concession agreement (the “4G Concession Agreement”). However, as described below, we believe that there is still room for some more development and improvement.