Mexican firms set to save Colombia's Magdalena river project

- Wednesday, October 19, 2016

Mexican firms set to save Colombia's Magdalena river project

The consortium Navelena, which is responsible for works to improve the navigability of Colombia's principal waterway, the 1500km Magdalena river, has revealed an alternative to save the billion-dollar contract for the project, which requires US$2.5bn in investments that it has struggled to fund.

During a public hearing, Navelena presented the Magdalena river regional autonomous corporation Cormagdalena with a signed memorandum of understanding from two Mexican firms interested in investing, reported local newspaper El Tiempo.

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The two firms are Grupo Ideal and FCC Américas, both owned by Mexican group Carso, which is controlled by billionaire businessmen Carlos Slim, currently considered the fourth richest person in the world based.

Luis Fernando Andrade, executive director of Cormagdalena and president of national infrastructure agency ANI, explained that the proposal involves the two companies acquiring a minimum 51% stake in Navelena, while Brazil's Odebrecht and Valorcon would reduce their stakes by half, being left with 43% and 6%, respectively.

Odebrecht, which has been unable to obtain financing for the construction phase of the project due to problems related to its involvement in the Lava Jato graft scandal in Brazil, has reportedly agreed to this initial plan, according to the daily.

With the proposal, US investment bank Goldman Sachs has indicated it is willing to finance the entire project. The proposal would make Grupo Ideal the concessionaire and FCC America, a subsidiary of Spanish company FCC, which is also controlled by Slim, would be in charge of the works.

Cormagdalena suspended the public hearing until October 28 in order to study the documents submitted by Navelena.

Odebrecht, which held an 87% stake in Navelena, filed paperwork in May to pull out of the project. The Magdalena river is Colombia's biggest waterway at 1,500km in length.