Andean region: Travelling light

May 1, 2013

Colombia is set to start awarding its $22 billion highway concession program. But managing the financing is easier said than done

By Ben Miller

While travel by road in Colombia has never been easy, finding the funds for upgrading the country’s highways has been almost as complicated.

The country has made some infrastructure financing innovations over the years. But now a $22.5 billion package of road concessions – dubbed the fourth generation (4G) program – is set to test the limits of the country’s financial markets.

The first of four sets of concessions in the 4G series opens for bidding this year. It is expected to be worth about $2.2 billion. Colombia’s bank lending market could cover this, as it has for many other infrastructure projects. But it would struggle with the unprecedented size of the total program – and there are worries that such funding would shut out other borrowers from bank lending.

The government and the private sector see a capital markets take-out as an obvious solution....

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