Fri. Feb 28th, 2020

Ecuador seeks infrastructure investment of more than one billion dollars



Ecuador seeks private investors to concession a series of infrastructure projects worth more than one billion dollars and asks for “confidence” in the reforms that President Lenin Moreno has initiated to consolidate legal certainty.

This was stated to Efe by the Minister of Transportation and Public Works, Gabriel Martínez, who is embarking on the search for private partners to offset the budget reduction that his portfolio has suffered in recent years.

“The ministry goes from an average of 1 billion dollars annually in the last decade for investment to a reality of 340 million dollars between 2019 and 2020,” Martínez says.

Money that should be used for “lagged projects (debts payable from ongoing projects) and also some new and maintenance of existing roads.”

The cut is due to the budgetary needs of a country that, in 2017, discovered an accumulated debt much higher than the one declared by the previous Government, and which has serious problems finding financing in the markets.

To request the help of international entities, Ecuador entered into a major adjustment at the public level in 2019, and directed its investment strategy to the “public-private alliance”.

“The Ministry is really in a situation in which either it seeks the private (sector) to make new constructions or it becomes very complex to do them,” he said.

This is how, within its scope, there are priorities such as the construction of a Metroférico for Quito, worth 740 million dollars of CAPEX; the concession of the port of Esmeraldas, 100-150 million, and the non-intrusive inspection in ports (installation of scanners), 150-200 million.

Other projects are the South Viaduct of Guayaquil, for 455 million dollars; the concession of 33 kilometers of road between Loja and Catamayo (in the south), for 40 million; the installation of photorradares, 57 million, and the concession of the Manta airport (west), valued at 70 million dollars.

All of them projects that include 10 to 30 years of concession and, in one case, that of the South Viaduct of Guayaquil, up to 50, according to a ministry table.

Asked by Efe, Martínez emphasizes that it is not a “privatization” of public assets – which can generate discrepancies in Ecuadorian public opinion – but rather “concessions.”

“Privatization means detachment of the asset, deliver ownership of the asset to the private (sector). This is a concession process in which the asset remains with the central State,” he emphasizes.

A situation, the one that Ecuador is looking for, in which the Government has “nothing to invest”, “no risk”, or in which “risk the minimum”.

Martínez points out that, unlike how the works were executed in the past, a performance calculation is being made for the State, and not just for investment coverage.

“We have planned, for example, in all the concessions that we are driving, that if (on a highway) it is possible to pass the traffic with which the financial year was calculated, those benefits will pass in a large majority to the central government.”

The intention of the Moreno Executive, he argues, is a mixture of foreign and national investment, but ultimately “private.”

“In port concessions we really have a lot of interest from foreign companies … It can be local as it can be external, but private investment for all the concession projects we have,” he said.

In that order, Martinez said he expected a total of “about $ 1 billion in investment,” including the expansion of roads from two to four lanes.

The Moreno Government will enter in May in its last year of management, and it does so after the social earthquake of October 2019, in which it had to reverse crucial decisions to increase the income of the State before a wave of protests.

He also had to reverse an economic bill and other commitments included in a fiscal sanitation plan that he had reached with international organizations, such as the IMF, which in total have granted the Andean country a credit line of more than 10,000 million.

“Obviously, the Government had a very hard time in October. The country risk skyrocketed, then also the non-approval of the new economic law had a negative impact. This obviously drives the financing for projects a little, or becomes more expensive.” , the minister acknowledged.

But he said that the country is demonstrating that “investment can be captured”, that its processes are “transparent” and that “there is no complaint from the companies that are participating” already in concessions and projects.

The search for investors in the current conditions is not easy and there have been circumstances in which a single bidder has appeared.

Therefore, Martínez clarifies that he works to “make them more attractive” and “that there are more participants” and considers that “right now there is an environment of much more stability and confidence”, above all, for the efforts aimed at offering the investor legal guarantees that They didn’t have it before.

With everything and doing self-criticism, he emphasizes that Ecuador must “overcome the thought that every four years we refounded the country” and that “the contracts are not respected” and called “start thinking in the country in the long term.”

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