The backbone of Colombian Multimodal
Transportation
APP - Corredor Ferreo Central
Logistics Industry
This project consisted in a Public-Private Partnership initiative with 100% private resources which intends to rehabilitate and maintain 524km of the Central Rail Corridor (CFC) under a Concession/Operation period of 30 years, guaranteeing optimal operating conditions for the purpose to turn the railroad into an efficient multimodal transportation alternative to Colombia's logistic system. The project contemplates a total CAPEX investment of $118 MUSD and an average yearly OPEX of $23 MUSD needed to enhance, maintain and optimize the existing railroad infrastructure and be capable to transport 6.3 MT/yr of cargo (container, bulk cargo, coal) along the corridor and connect the inner part of the country and the Caribbean coast. This project will represent a 20 to 30% reduction fee to logistics transporters and companies adding competitiveness to Colombian industries.
30Yrs
Concesion
100%
Private Investment
524km
Rail Road
$118MUSD
Total Investment
Role
I was in charge of leading the development of the economic, technical, financial, and logistical areas of the feasibility study presented to the National Infrastructure Agency (ANI). During a 2 years period, we evaluated all areas of the project, involving third-party consultants and running in house analysis in order to determine technical requirements, conduct related studies, evaluate optimal operational conditions, calculate unit prices, quote all equipment required, and conduct logistical models to optimize the operation. All that information was finally included in a multimodal business financial model which I have personally developed, together with the supervision and approval of a professional investment banking company.
Additionally, I built a complete demand study, gathering information from reliable sources and committing cargo suppliers to secure cargo with preferential rates under Letters of Intentions (LOI), in order to secure minimum cargo volumes and make the project feasible. This study was finally audited by Advisian, Worley Parsons, a global consulting firm who evaluates several aspects of the project, technical and economics. This study was utilized as the main input into the final assessment done by ANI.
Challenges
Taking into consideration the complexity of executing a Public project in Colombia, we faced critical challenges during the development of this project, particularly government approaches, and politicals inclinations of ANI directors influenced dramatically the approval and concession of the project. Economical differences in how the project was structured and how the WACC and IRR were calculated, turned ANI´s assessment into a discussion towards the level of profitability the project should have, leaving aside the fact that the investment was 100% private, and no public resources were considered.
Outcomes
We filled a complete feasibility study meeting all evaluation criteria as well as meeting the deadline without any delays. the National Infrastructure Agency (ANI) recognized that the level of detail and analysis delivered was never seen before, and is now the best information available of the Corredor Ferrero Central (CFC). However, unfortunately, the project was rejected since the change of government indicated that the project would be developed by the state in order to make it economically viable and subsidize the cost of transportation. After two years, we continue waiting for the government to pronounce and determine whether they will carry out the project by their own means or they will open a tender competition once again.
