Magdalena River Dredging Project Fails to Meet Financing Deadline
Cormagdalena – the Colombian government agency overseeing a proposed dredging project for the Magdalena River that would dramatically boost freight movements – announced June 12 that project developer Navelena SAS failed to meet a June 11 deadline to obtain financial close on the COP$2.5 trillion (US$877 million) project.
The Magdalena River dredging scheme is among key infrastructure projects either proposed or underway that would provide huge economic boosts to Medellin and Antioquia, as well as to Colombia generally (see “Antioquia, Medellin to See Huge Economic Boost from Infrastructure Projects,” Medellin Herald, November 5, 2015).
The “public-private association” (APP in Spanish initials) proposed to undertake the 900-kilometers-long project would open-up new freight-shipping opportunities all the way from Barranquilla (Atlantic Coast) to Barrancabermeja (Ecopetrol refinery site) and onward to Puerto Berrio, Puerto Triunfo and Puerto Nare (in Antioquia) and finally Puerto Salgar (Cundinamarca).
Because of Navelena’s failure to achieve financial close by the deadline, Cormagdalena now proposes to impose daily COP$21 million (US$7,000/day) fines against the company, according to the announcement
Brazil-based construction contractor Odebrecht previously had been the majority shareholder in the project, but sold its shareholding following the scandalous arrest of its president in Brazil on corruption charges. The scandal had scared-off investors for the Magdalena River dredging project, Cormagdalena noted.
However, 12 other companies have now indicated interest in investing in the project. But Cormagdalena cited “confidentiality agreements” that prevent disclosure of company names.
“These firms — all foreign — are in the stage of legal review of documents relating to the transfer [of interest], as well as [agency reviews of] achieving funding by the partner,” according to Cormagdalena.
“In this regard, Cormagdalena formally notified the associated Navelena SAS that in a period not exceeding 30 days, Navelena must define the assignee for the final authorization of the corporation form and documentation demonstrating financial closure, under penalty of starting the expiration of the contract.
“We will continue to monitor fulfillment of all requirements, terms and legal conditions with the support of the Attorney General’s Office. Our main objective remains to recover the navigability of the Magdalena River through a transparent and law-abiding contract management,” according to the agency.