VZCZCXYZ0001
RR RUEHWEB

DE RUEHBO #4120/01 3642113
ZNR UUUUU ZZH
R 302111Z DEC 09
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 1849
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHBJ/AMEMBASSY BEIJING 0007
RUEHBO/AMEMBASSY BOGOTA
RUEHBR/AMEMBASSY BRASILIA
RUEHBU/AMEMBASSY BUENOS AIRES
RUEHCV/AMEMBASSY CARACAS
RUEHLP/AMEMBASSY LA PAZ
RUEHPE/AMEMBASSY LIMA
RUEHQT/AMEMBASSY QUITO
RUEHSG/AMEMBASSY SANTIAGO
RUEHZP/AMEMBASSY PANAMA
RULSJGA/DEPT OF TRANSPORTATION WASHINGTON DC

UNCLAS BOGOTA 004120 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ELTN EFIN ETRD EINV PGOV CO
SUBJECT: GAINS IN SECURITY PLUS $2.5 BILLION YIELD BIG INFRASTRUCTURE 
PROJECTS 
 
REF: BOGOTA 3033 
 
¶1.  (SBU) Summary.  Due to consistent improvements in the security 
situation and US$2.5 billion in financial incentives, Colombia has 
been able to award the largest transportation project in its 
history - called "Ruta del Sol" or the Sun Route.  This 1,000 
kilometer highway project connects Colombia's north cost to its 
interior (Bogota) and should bring goods to markets at cheaper 
prices.  The GOC awarded two of the three legs in December, with 
plans to reopen the bidding for the third leg in early 2010.  No 
U.S. companies submitted bids primarily due to requirements to 
build and manage the highway for a 20-year term.  However, U.S. 
exporters of safety and security equipment and intelligent 
transportation systems software and hardware are following the 
project closely.  End Summary. 
 
 
 
The Sun Route Lures International Investors 
 
------------------------------------------- 
 
 
 
¶2.  (U) The Ruta del Sol project is a 1,000 kilometer four-lane 
highway that will stretch from Bogota to the port of Santa Marta on 
the Colombian Caribbean coast.  In defining the terms of the 
concessions, the GOC received assistance from the World Bank's 
International Finance Corporation.  The project is divided into 
three legs, two of which were awarded on December 15 to Consorcio 
Vial Helios (an Argentinean-Colombian consortium) and Promise of 
Future Society Plural Structure Concessionary Ruta del Sol SAS (a 
Brazilian-Colombian consortium).  The third leg had one bidder, a 
Chinese-Colombian consortium, who failed to meet the conditions of 
the bid. 
 
 
 
¶3.  (SBU) The ability to award these mega-infrastructure projects 
and receive bids from major international companies is due to the 
GOC's willingness to provide US$2.5 billion to those who will 
construct the highway and the improved security situation.  Over 
the years, murder and kidnapping rates have dropped dramatically, 
while the rule of law has strengthened through major judicial 
reforms.  [Comment: The $2.5 billion is essentially a grant to 
attract foreign companies who would otherwise not bid due to 
perceived security conditions, the size of the project, and the 
timeframe of the concession. End Comment] 
 
 
 
¶4. (U) Minister of Transportation Andres Uriel Gallego said highway 
construction will begin in 2010 and should be completed in five 
years.  The project will go through eight departments and 39 
municipalities, (an area that makes up 23.3 percent of Colombia's 
GDP).  The new highway is expected to reduce transportation costs 
within Colombia, which at the moment increases the price of goods, 
coming and going, by 20 percent.  Another positive aspect is that 
Gallego expects the project will create more than 8,000 jobs in a 
job market that has over 11 percent unemployment. 
 
 
 
Internationals Represented but No U.S. Companies Bid 
 
--------------------------------------------- ------- 
 
 
 
¶5.  (U) Consorcio Vial Helios, made up of Colombian companies 
Conconcreto and Solarte Brother and the Argentinean Company Lecsa, 
will receive US$500 million from the GOC over six years as it 
constructs the first leg, measuring 78 kilometers.  The 
Brazilian-Colombian consortium, consisting of Brazilian firm 
Odebrecht and the Colombian financial group Grupo Aval (owned by 
the wealthiest Colombian - Luis Carlos Sarmiento), will receive 
US$1 billion over 16 years as it builds and operates the second 
 
 
leg, measuring 528 kilometers.  Although not awarded, the GOC 
expects to provide an additional US$1 billion to the third 
consortium in its efforts to construct and manage the third leg, 
measuring 465 kilometers.  Embassy contacts told us that they 
expect China Railway Shisiju company to rebid on the third leg in 
January. 
 
 
 
¶6.  (SBU) No U.S. companies threw in their hat for this mega 
highway project.  Officials from the U.S Trade Development Agency 
and the U.S. Export-Import Bank note that the majority of large 
U.S. construction companies do not build, maintain, and manage toll 
highways for 20-year concessions.  They added that once a highway 
is built, the companies normally hand it over to the state or 
federal government to manage.  Other factors that have dissuaded 
U.S. investment are a)Colombia ranked 153 out of 180 for respect 
for contracts in the World Economic Forum's "Global Competitiveness 
Index", and b)GoC's overly complicated Law 80 which is the 
framework for these awards and is in need of an overhaul (see 
reftel). 
 
 
 
GOC to Sell State Assets to Help Finance More Projects 
 
--------------------------------------------- --------- 
 
 
 
¶7.  (SBU) The Ruta del Sol project is one of many infrastructure 
projects Colombia is finally moving forward on.  For years, the GOC 
has penciled these highway projects in its agenda, but has been 
unable to execute any due to security, investment, or contractual 
concerns.  At the moment, there are an additional 2,700 kilometers 
worth of highway projects in the pipeline.  To help finance these 
projects, the GOC plans to sell state assets to include Colombia's 
third largest electricity power company, ISAGEN, and an additional 
10 percent of GOC's stake in Colombia's petroleum company, 
Ecopetrol, the largest company in Colombia. 
BROWNFIELD