27 February 2008
In March this year the presidents of Brazil, Colombia, Venezuela, and Spain, gathered in the Venezuelan city of Ciudad Guayana to discuss the details of several regional infrastructure projects designed to pull their economies out of poverty.
At a joint press conference at the end of the summit, Colombian president Alvaro Uribe said, “This meeting has been a step forward in the process of integration, infrastructure integration, integration of the economies, integration of cooperation, integration to advance in the eradication of poverty.”
Echoing these sentiments, Brazil's Luiz Inacio Lula da Silva also emphasised that the summit's central goal had been to “consolidate a policy of infrastructure, to consolidate the integration of South America ... [and] to find mechanisms to finance that infrastructure.”
The meeting was part of the continuing efforts being made to keep the Integration of Regional Infrastructure in South America (IIRSA) initiative on track. IIRSA consists of 10 regional “hubs” – groups of interrelated projects (see p.20), designed to promote regional economic prosperity through infrastructure integration. Only two hubs cross Colombia: the Andean and Amazon.
The Andean Hub is made up of the “main articulation nodes” – trunk road networks, ports, airports and border crossings – in Bolivia, Colombia, Ecuador, Peru and Venezuela.
It joins the main cities in these countries through two big North-South road corridors: the Pan American Highway, along the Andean mountains in Venezuela, Colombia and Ecuador, and the Peruvian coastline; and the Marginal Jungle Highway, which borders the Andean Mountain Range at de los Llanos in Venezuela and the Amazon Jungle in Colombia, Ecuador and Peru. It covers a total area of about 2.4 million km2, and has almost 92 million inhabitants.
The Amazon Hub is a “buffer” that extends for about 1000 km along the multi-modal transport system that connects ports on the Pacific, such as Tumaco in Colombia, Esmeraldas in Ecuador and Paita in Peru, with the Brazilian ports of Manaos, Belen and Macapa.
Its aim is to join both oceans through the Huallaga, Maranon, Ucayali and Amazon rivers in Peru, the Putumayo and Napo in Ecuador, the Putumayo in Colombia and the Ica, Solimoes and Amazon in Brazil along over 6000 km of navigable waterways, and the river ports of El Carmen on the Ecuadorian/Colombian border, Gueppi in Colombia and Sarameriza and Yurimaguas in Peru. It covers 4.5 million km2, and has about 52 million inhabitants.
Besides the IIRSA initiative Colombia is also involved in the Plan Puebla Panama. A multi-billion dollar development plan announced in 2001, it is designed to “promote the regional integration and development” of the nine southern states of Mexico with Central America and Colombia.
Like IIRSA, the Plan Puebla Panama is intended to remedy a lack of investment and stimulate trade in the region by building or improving large infrastructure projects such as highways, air and sea ports, and electric and telecommunications grids. It consists of eight initiatives: energy sector integration, transportation integration; telecommunications integration; trade facilitation; sustainable development; human development; tourism; and disaster prevention and mitigation
These projects will take place along five principal axes, or corridors, of development: the Pacific Axis, which carries the majority of trade in the region; the Gulf of Honduras Axis, which aims to develop trade between the Pacific coastal cities and those in the Caribbean region; the Peten Axis, which runs from Puerto Cortes, Honduras to Villahermosa, Mexico; the Mexico Trans-systemic Axis, consisting of the Isthmus of Tehuantepec; and the Guatemala/Yucatan Axis.
According to a study by US-based non-profit organisation InterAction about US$ 50 billion will be needed to realise all of the Plan Puebla Panama projects. Of this 35% is expected to come from national governments in the region, 24% from the Inter-American Development Bank (IADB), 15% from the private sector, 7.5% from the Central American Bank for Economic Integration (BCIE), 5% from the World Bank, and 6.3% from as yet to be determined sources.
Not only will the Plan Puebla Panama integrate into the IIRSA initiative it will also link, at its northern extreme, with the Trans-Texas Corridor. This 307 m wide, 6000 km long corridor, which will include road and rail links alongside utility pipelines, will extend from the US-Mexican border through the entire US along Interstate-69 and into Canada via Port Huron in Michigan.
There is also the Atrato-Truando Canal. About 80 km in length it will use two semi-navigable rivers in the Colombia-Panama border region –the Atrato and the Truando – to create a sea-level canal between the Atlantic and Pacific Oceans. Ships larger than 59000 tonnes, the current limit on the Panama Canal, would be able to travel along its course.
Besides road, rail and waterway links there is also electricity. With domestic consumption at about 49 TWh, and production of about 50.5TWh per year in 2005, Colombia exported 1.76 TWh of electricity to Ecuador (3.5% of total production).
The Plan Puebla Panamá includes a project of “electric interconnection” between Colombia and Panama, which will integrate Colombia with Central America. Currently being constructed by Interconexiones Eléctricas in Colombia and Empresa de Transmisión Eléctrica in Panama, the project involves the construction of a 300 MW transmission line from Colombia to Panama and 200 MW capacity transmission line from Panama to Colombia. They are expected to become operational in 2010.
Elsewhere, the country's main rivers are providing Colombia's major utility companies with an ideal source of electricity generation and wealth. About 81% of its electricity currently comes from hydro-electric power plants, and several projects are either currently on the drawing board or, like the US$ 1 billion Porce III project (see this month's site report), currently under construction.
Besides international initiatives President Uribe's US$ 770 million Plan 2500, announced in 2002, is designed to address Colombia's dilapidated highway system. It includes construction and upgrading of over 3000 km of highway by the end of 2010 and is seen as a key stepping-stone to economic prosperity.
At the same time, about US$ 285 million will be spent on expanding capacity and modernising the country's ports, while Bogota's El Dorado International Airport will get a US$ 500 million upgrade. There are also plans to rehabilitation 3000 km of railway and 11000 km of inland waterways.
While these measures are designed to increase Colombia international competitiveness and provide access to market for the country's labour pool and goods, they are also designed to help increase foreign direct investment (FDI) by making the country more attractive to foreign investors.
According to the World Economic Forum's (WEF) index for measuring attractiveness for private investment in infrastructure in Latin America, Benchmarking National Attractiveness for Private Investment in Latin American Infrastructure, which covers 12 economies in Latin America and the Caribbean, Colombia ranks third in its Infrastructure Private Investment Attractiveness Index (IPIAI).
The World Bank has also said infrastructure investment in Colombia is “crucial”. At a meeting with president Uribe in October World Bank vice president, Latin America and the Caribbean, Pamela Cox, announced that interest rates on WB loans to Colombia would be cut by 0.5 percentage points.
“Colombia has been ranked as the top reformer in Latin America for the second time according to the Doing Business 2008 report by the International Finance Corporation,” she said, adding that the country ranked sixth among the 10 countries that have so far made the most reforms to improve their investment climate.
Putting these elements together should see Colombia continue to prosper economically, giving it money to spend on its old infrastructure while investing in new transport networks. Good news for contractors and equipment manufacturers alike.