Latin Finance - October 2008 - 13

latam ports Floating the Ports by Ben Miller long list of maritime projects has been drawn up by governments across the region looking to boost export capabilities. Including the Panama Canal, scheduled projects require funds topping $25 billion. Financing may come partly from governments and multilaterals, but most will need to be sourced from a pool of private liquidity that appears to be rapidly evaporating. Latin America should spend at least $10 billion on port infrastructure by 2010, according to CAF. The multilateral expects another $20-$25 billion in investment between 2010 and 2020. “The sector is growing exponentially, and suffered from underinvestment during many years,” says Julian Villalba director of CAF’s port services quality program. “We consider these estimates to be on the conservative side.” All countries in the region need better maritime transit hubs to support exporters. Toll roads, airports, power plants, oil refineries and other infrastructure projects offer a slew of places for investors and lenders to put cash into the regional growth spurt. Peru requires about $1.5 billion to add a pier to Lima’s Callao port and upgrade smaller facilities in the area. Privatizations are expected this year for the smaller hubs at Piura on the north coast and Pisco on the south by the end of the year, as well as at Ilo and Salaverry next year. On the private side, Petroperu and Vale are looking to build facilities around the northern city of Bayóvar. Ecuador will need to line up more than $1.2 billion to cover upgrades on the drawing board for the port expansion at Manta, including an integrated system to link to a river and on to Brazil. In August, Mexico’s president Calderón opened bidding on the long-awaited Punta Colonet port and rail complex on Baja California’s coast, 150 miles south of the US border, one of the biggest in the region’s A Investors and lenders will have no shortage of LatAm port projects over the next few years. Who gets the liquidity, and on what terms, is less certain. Exports are rising faster than the capacity to ship, providing opportunity for investors pipeline. With cost estimates running from $4-$7 billion, it will be the biggest port project – perhaps even the biggest project in the Calderón infrastructure plan – from a Mexican market that has seen few such financings in recent years. Bidding for Colonet has attracted the interest of more than 50 major world names in construction, railroads and terminal operation, according to the government. Construction could start as early as late 2009, and last about four years. Upgrades to other Mexican ports, including Lázaro Cárdenas and Manzanillo on the Pacific coast and Veracruz and Altamira on the Gulf coast should require at least another $2 billion. “Once the cashflows are transparent enough and visible for the banks, there’s ever more creative ways of putting the money in,” says Alonso Quintana, CFO at Mexican integrated construction firm ICA, which is evaluating a bid. Quantifying the risks for lenders could be difficult, but Quintana expects the winner to use traditional project finance. Brazilian Promise Brazil has perhaps Latin America’s most urgent port pipeline, due to everincreasing exports. “The demand for investment is there, and it is big,” says Geraldo Villin director of Brazil investments at infrastructure builder Odebrecht. “There are many options. Those that get done will be the ones that make the most economic sense.” His firm is working on ports like the new Embraport terminal at Santos, Rio Grande in the south and Itaqui in the October 2008 LATINFINANCE 13

Latin Finance - October 2008

Table of Contents for the Digital Edition of Latin Finance - October 2008