The Colombian government is seeking to reassure Canadian financiers that it's safe to invest in its plan to build 8,000 km of roads through the mountainous South American country.
Colombia, which has a free-trade agreement with Canada, expects to spend $25-billion (U.S.) by 2020 on new roads and highways – some of which will be built up and down three mountain ranges to allow easier travel between the capital Bogota and the Pacific coast.
It's an ambitious plan. By comparison, the expansion of the Panama Canal is a $5-billion project. But before the government can stick a shovel in the ground, it must secure the funds. Developers are currently bidding for a piece of the action and will need to form partnerships with financiers.
"We know financing is challenging," Luis Fernando Andrade, the president of Colombia's national infrastructure agency, told some of Canada's biggest institutional investors, including Caisse de dépôt et placement du Québec and Canada Pension Plan Investment Board. "We need to get all the larger firms involved," he said.
The Ontario Teachers' Pension Plan, which has visited Colombia several times to assess the situation, told Mr. Andrade that it was concerned about the length of time it took builders to obtain the necessary permits and questioned whether the government could seize the contract after the investment was made. "We are trying to get our head around some of the risk," said one Teachers representative.
But Mr. Andrade said new laws would soon be implemented to ensure that construction would not get tied up in red tape and said they were working to make sure the process was as transparent as possible.
Mr. Andrade, along with the head of the country's infrastructure financing bank, flew up to Toronto for three days to allay Canadian concerns. He said a number of Canadian pension funds have already visited his country two to three times.
The Colombian government must fund up to 50 per cent of some of the roads that will be built on difficult terrain. It is creating new debt securities to appeal to the widest range of foreign investors.