Infrastructure market in Colombia 

In the last decade, Colombia has undertaken ambitious programs to modernize its infrastructure (mainly transportation) through the 4th and 5th generation concessions (4G and 5G).

The 4G concessions began in 2014, with 29 road corridor projects. By June 2023, 4G projects had a 75% completion rate, with eight projects finished and functioning.

In 2020, the 5G concession program was launched to achieve transportation inter-modality. To date, 22 projects including railways, airports, and river navigability projects are included in this round of concessions.

Despite these efforts, there are still important infrastructure backlogs in areas like transportation, social, and energy infrastructure. This presents opportunities for Canadian companies.

Colombia's new government priorities include development of rail corridors, modernization of tertiary roads, construction of social infrastructure, and decentralization of power generation to reach isolated populations.

Key opportunities for Canadian infrastructure companies in Colombia:

• Social infrastructure: Led by the National Infrastructure Agency (ANI), Colombia plans to start awarding public private partnerships (PPPs) for construction of social infrastructure in the next two years. A total of 13 projects are in the road map, including high-complexity hospitals, educational infrastructure, as well as water and sanitation initiatives.
• Airports: Important projects are in the pipeline, such as modernization of the airports of Cartagena and San Andres. Another upcoming project will be El Dorado Max, a private initiative led by Odinsa, to expand Bogotá's airport.
• Urban transportation: Several main urban transportation projects for the coming years are in Bogotá. The first line of Bogotá's subway is under construction, with an advancement of 25%, while the second line is open for bidding until February 2024. Another important project would be the "Regiotram", a commuter train to connect Bogotá's surrounding areas.
• Rail corridors: A top priority of the Colombian Government. Several projects are currently in the pipeline, such as the PPP La Dorada-Chiriguaná (central rail corridor), and connection of this corridor with Bogotá and the Pacific region.
• Energy Communities: The Government is currently structuring the "Comunidades Energeticas" initiative, which are associations for decentralized generation and commercialization of energy through non-conventional renewable energy sources.

Notable challenges for Canadian infrastructure companies in Colombia:

• The infrastructure sector is one of the most impacted by corruption and accusations of a lack of transparency.
• The Colombian Government's regulatory reforms agenda might impact the sector in the future. Likewise, procedures for obtaining environmental licenses and conducting social consultations can often be complicated and lengthy.
• Competitiveness of Canadian companies has been impacted in recent years by a significant devaluation of the Colombian peso and high inflation rates, making Canadian products pricier for Colombian buyers.
• It is recommended that Canadian companies identify and establish relationships with the main private concessionaires in their sector of interest. Identifying priority areas and funding available from main international financial institutions (IFIs) with local presence is a good practice.
• Having a local presence or a partner is highly appreciated by local buyers and can help in the building of trust-based relationships, essential to doing business in Colombia.

Colombian business landscape

• In terms of performance, the infrastructure sector has witnessed a significant slowdown in recent years. Between 2022 and 2023, the sector contracted by more than 12%, mainly driven by the economic juncture, delays in public projects, and the final phase of 4G concessions.
• The sector is expected to recover in 2024 and 2025, thanks to commencement of works of some of the 5G concessions and construction of the first line of Bogotá's subway, among other big projects.
• One of Colombia's main challenges in terms of energy infrastructure is the connection of non-conventional renewable energy sources (FNCER) to the national electricity transmission system.
• There is significant financial limitation for public financing of infrastructure projects. However, Colombia has paved the way for other financial alternatives, such as PPP and private initiative projects.

Summary

The infrastructure sector has a favourable outlook in Colombia for the coming years, with a road map of projects in areas in which Canada has significant capabilities: transportation, energy infrastructure, and social infrastructure.

Colombia has developed an institutional framework that is increasingly open to include the private sector in infrastructure building, expanding the scope for PPP's to social infrastructure projects for instance.

Important opportunities exist for Canadian companies in the projects' structuration phases, as Canadian engineering firms are recognized for their expertise. Canadian companies positioning themselves with innovative solutions for the supply chain of infrastructure projects also have great development perspectives i n the country.

For more information on Infrastructure in Colombia, market please contact bogotatd@international.gc.ca