International Construction Regional Report: Latin America

By Chris Sleight10 May 2013

This JCB 3C backhoe loader is being used by civil engineering contractor Construcciones y Asfalto An

This JCB 3C backhoe loader is being used by civil engineering contractor Construcciones y Asfalto Andesreinstating to reinstate sections of a 40 km stretch of the Carretera Nacional Meridas Barinas Tr

It seems that not a day goes by without an announcement of a major infrastructure project in Latin America. Road building is a particular focus, and the last few months have seen some significant projects come up across the region.

In Chile for example, the Ministry of Public Works (MOP) says it plans to put 17 major projects out to tender this year, with a total value of US$ 7.71 billion. These include the construction of 97 km of urban roads, 92 km of trunk roads, 201,000 m2 of airport terminals, 29,000 m2 of public buildings and some 3,900 hospital bed spaces.

One of the flagship projects is the Amerigo Vespucci East urban motorway project involving an investment of nearly US$ 2 billion. The project will include construction of a 13 km tunnel beneath the capital, Santiago’s streets.

In Peru meanwhile, the mayor of Lima, Susana Villarán, has announced a US$ 4 billion, three-year programme to update the capital’s road infrastructure. It is estimated that Peru has an infrastructure deficit of about US$ 37 billion, and some 30% of this is focussed on the country’s capital. The projects planned between now and 2015 cover a variety of road building, urban planning and real estate schemes designed to revive the city’s historic centre.

There are also plans to extend Lima’s metro network, following the inauguration of the first section in 2011. Line 2 will link the city’s Callao and Ate districts, while Line 4 will connect the downtown area with

Jorge Chavez International Airport. The total investment for the two schemes is put at US$ 5.37 billion – US$ 4.13 billion for Line 2 and US$ 1.24 billion for Line 4 – and both will be demanding. There will be 27 stations on Line 2 for example, and the majority of the rail link will be in tunnels. These are expected to be driven with tunnel boring machines (TBMs) to minimise disruption to the city.

The Colombian capital of Bogota is also moving down the light rail route. The city has just started a feasibility study into a metro scheme, which could see construction work start in January next year, with completion three years later.

Two routes are being looked at. One would start in the southern district of Villa del Rio and terminate in the city centre at La Sabana, with 18 stations along its 16 km length. A second 43 km line out to the north of the city would use an existing rail line with 27 stations on it. In total, the two links are expected to carry 500,000 passengers per day.
Canal alternative

In Guatemala meanwhile, plans have been mooted for a coast-to-coast rail project connected to two major new ports on the Atlantic and Pacific. Although details are scarce, the Inter-Oceanic Corridor of Guatemala (CIG) would be a 277 long, 140 m wide corridor providing pipeline transportation alongside the rail link, and ultimately a highway as well. Each port would have a capacity of 3.4 million twenty foot equivalent unit (TEU) containers per year, and coast-to-coast transfer times of 8 hours are being talked about.

There are plans for the first stage of development to be carried out between 2015 and 2022.

Although the scheme is an obvious competitor to the Panama Canal, which is currently undergoing a huge renovation to allow it to handle 12,000 TEU vessels (New Panamax), compared to the current constraint of 5,000 TEU ships, the CIG is being targeted at even larger vessels.

In Phase 1, the new ports on either coast will be built to accommodate 18,000 TEU vessels, and Phase 2 will see berths for 22,000 TEU ships added. The investment cost for Phase 1 is put at US$ 7 billion, and some sources have quoted the total cost as US$ 12 billion.

This illustrates that there is much more to the infrastructure market in Latin America than road building. Even in Brazil, for example, where a World Bank study showed that only 6% of the country’s vast 1.6 million km road network was paved, there is a broad focus on all types of infrastructure.

A key focus for Brazilian president Dilma Rousseff has been rail transport, and last August saw her set up a new government agency called Enterprise Planning and Logistics (EPL) to manage the investment and construction process and ensure the different modes of transport link up.

It will take on responsibility for the construction of the country’s next 10,000 km of railways, with a projected investment of US$ 40 billion.
Historically, the needs of freight have been the main driver for Brazil’s railway development, and lines have been built with a view to getting industrial and agricultural products out to markets. But under the EPL, there will be a greater swing towards passenger trains.

Top of the list is a planned 510 km high-speed link between São Paulo and Rio de Janeiro, which is expected to be the first high-speed rail link in Latin America. It was originally hoped that the link would be in place in time for the 2016 Olympics, but this looks unlikely as the original call for tenders in 2011 failed to attract any bids for the US$ 21 billion scheme.

Brazil’s infrastructure plans also include US$ 21 billion to build a further 7,500 km of roads over the next 25 years.

Elsewhere in Latin America, one of the most significant road building schemes underway at present is the Ruta Del Sol in Colombia. This 1,070 km dual carriageway is being built at a cost of US$ 2.6 billion to link the capital Bogota to the country’s Caribbean coast by way of the port cities of Cartagena, Santa Marta and Barranquilla.

Construction of National Route 45, to give the road its official nomenclature, involves the refurbishment of 993 km of existing highways along with a new section 78 km.

The project has been split into three packages by the Colombian National Infrastructure Agency (ANI), and the most complex is the 78 km of new build, which is being constructed in the mountainous region between Villeta and Puerto Salgar, in the department of Cundinamarca. The project includes three tunnels totalling 3.5 km and 5.5 km of bridges and viaducts.

The remaining two contract packages, of 528 km and 465 km, are schemes to refurbish existing roads and build new structures where necessary. Work on the 528 km second sector for example involves the construction of some 100 bridges and six service areas.
All three sections are being built on a public private partnership (PPP) model, with concession periods of 25 years.

Diversity

Notwithstanding the heavy focus on road building in Latin America, other modes are beginning to gain more importance in the infrastructure market. Light rail continues to gain ground as a solution to traffic congestion in some of the region’s largest cities, while far-reaching modern rail links between key cities, ports and trading hubs are being mooted for the future.

As ever, financing schemes is a challenge, and governments are looking more and more to the private sector and PPP models to pay for new infrastructure.

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