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Colombia : Mobilizing private capital for infrastructure (English)

After a fairly successful start in the early 1990s, interest in private participation in infrastructure (PPI) in Colombia has fallen substantially. This includes both domestic and international investors. Sectoral issues are the dominant reasons for decline in interest in PPI. Each sub-sector has specific issues that need to be addressed. Macro issues such as a weak investment climate, uncertain legal framework, security (out side of the large cities), worries stemming from the recent economic crisis, as well as loss of investment grade credit rating add to investor concerns. PPI, which began mostly as project finance, is now almost entirely corporate finance - making it a less attractive option for established global players. On balance, investors are more concerned about sectoral issues. In order to attract PPI therefore, sectoral reforms would be a priority. These are also a pre-condition for the creation of sound infrastructure projects that in turn can be financed by both domestic and international investors. The Government therefore needs to develop a sound policy on contingent liabilities and guarantees keeping in mind that it has to be a balance between incurring contingent liabilities and attracting investment. Better identification and allocation of risks between government and private players is key. Long-term domestic resources are increasingly available in Colombia - especially as pension funds continue to grow strongly. These can potentially be tapped to finance infrastructure. Regulatory reforms to pension funds to permit them to invest in infrastructure are important to create the supply side of funds - but should go hand-in- hand with sector reforms that strengthen the soundness of the demand side for funds.

Details

  • Author

    Srinivas,Subrahmanya Pulle

  • Document Date

    2004/09/01

  • Document Type

    Working Paper

  • Report Number

    32090

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Colombia,

  • Region

    Latin America & Caribbean,

  • Disclosure Date

    2005/05/03

  • Disclosure Status

    Disclosed

  • Doc Name

    Colombia : Mobilizing private capital for infrastructure

  • Keywords

    Finance, Private Sector & Infrastructure;minimum debt service coverage ratio;credit enhancement;private participation in infrastructure;mechanisms for credit enhancement;public willingness to pay;payment of debt service;mobilizing domestic capital;Cost of Doing Business;legal and regulatory framework;private participation in electricity;investment grade credit rating;water supply and sewerage;investment grade rating;net present value;allocation of risk;conflicts of interest;infrastructure development fund;lines of credit;construction and operation;portfolio of investment;foreign direct investment;financial sector policy;dealing with bank;international bond issue;private sector funding;regional stock exchange;return on investment;toll road sector;civil court cases;local credit rating;domestic capital market;long-term credit risk;case of bankruptcy;government borrowing capacity;impact of credit;form of credit;country credit rating;law and regulation;power of attorney;capital intensive nature;initial capital cost;cost of fund;private sector concession;mass transit system;quality of governance;degree of assurance;international private investors;private infrastructure investment;access to investment;electricity and gas;degree of independence;civil aviation authority;roads and highway;local currency financing;private sector service;state owned enterprise;adverse budgetary impact;supply of power;wholesale electricity market;improvements in efficiency;supply of electricity;restrictions on price;cost of construction;access to capital;local capital market;government budget resource;risk management strategy;minimum income guarantee;financial sector crisis;contingent liabilities;contingent liability;

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Citation

Srinivas,Subrahmanya Pulle

Colombia : Mobilizing private capital for infrastructure (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/386591468241451370/Colombia-Mobilizing-private-capital-for-infrastructure