Navigability of the Magdalena River PPP: Publication of Pre-Bidding Documents in Colombia

For more than a decade, Colombians have been waiting for the successful completion of the project to achieve the navigability of the Magdalena River. On Nov. 3, 2021, the minister of transportation announced the publication of the pre-bidding documents to participate in the contracting process.

What Should You Know About the Concession Contract?

• Contractual modality: It will be the granting of a concession by the National Infrastructure Agency (Agencia Nacional de Infraestructura or ANI) to the awarded bidder, which will be developed through a public-private partnership (PPP), governed by Law 1508 of 2012 of Colombia.
• Contractual purpose: Definitive studies and designs, financing, construction, dredging, and operation and maintenance (O&M) of the navigable channel of the Magdalena River between Barrancabermeja and Bocas de Ceniza
• Term: 15 years and 3 months
• Value: COP $1,537,000,000,000,000
• Remuneration:
  • Sources of payment:
    • Budgetary appropriations (vigencias futuras)
    • Revenues from the collection of fees for the use of the canal
    • Payment securities issued by ANI (subject to feasibility study between ANI and the General Directorate of Public Credit)

1. Component A – Maintenance dredging: semi-annual value from the beginning of the dredging work, which will correspond to that offered by the selected bidder (subject to the maximum values to be defined in the final bidding documents – approximately COP $30,500,000,000). Payment subject to compliance with indicators.
2. Component B – O&M other than maintenance dredging – navigation support services: semi-annual value corresponding to that offered by the selected bidder (subject to the maximum values to be defined in the final bidding documents, approximately COP $7,000,000,000,000). It is due at the end of each calendar semester counted from the date of commencement of operating activities.
3. Component C – Initial availability of Functional Units (FU): value associated to the completion and initial availability of each FU and will correspond to the value offered by the selected bidder (subject to the maximum values to be defined in the final bidding documents, approximately COP $511,600,000,000). The value of Component C will be distributed as a percentage among the 18 FUs.
4. The possibility of payment of Component C through the delivery of payment securities to the concessionaire (public debt instruments to be issued by ANI) is being evaluated.
5. Component D – periodic availability of FUs with maintenance indicators: remuneration for the execution of the FUs and subject to compliance with maintenance indicators. Approximate maximum value, COP $571,200,000,000. The value of Component D will be distributed as a percentage among the 18 FUs.
6. Component E – O&M FU: semi-annual value associated to the fulfillment of the maintenance indicators of each FU that will start to be paid with the signature of the first FU completion deed. Subject to the maximum values to be defined in the final bidding documents, approximately COP $3,000,000,000,000. The value of Component E will be distributed as a percentage among the 18 FUs.

• Trust: the successful bidder must create a trust through which all project resources will be managed, including the annual contributions to be made by Cormagdalena for canal use fees.
• Permits and Licenses:
  • No environmental license will be required.
  • No prior consultation process will be required.
• Types of Indicators
  • Availability
  • Maintenance
  • Navigability
  • Service (navigation support)
• Who Can Participate?
  • Natural or legal persons, Colombian or foreign, individually or through plural structures, as long as they comply with the qualifying requirements defined by ANI.
  • The preliminary requirements are as follows:
    • Financial capacity: minimum net worth of COP $226,910,000,000
    • Investment experience

1. An infrastructure project concession with a financing value is at least COP $136,148,000,000, or
2. Up to four infrastructure project concessions with an aggregate financing value of at least COP $181,530,000,000.

Please note that the pre-bidding documents are published so that interested parties may express their concerns and comments so that they may be addressed in the final bidding documents, the publication of which will initiate the bidding process for the project. Interested parties may access the project's Data Room.

Holland & Knight has carefully studied the pre-bidding documents of the project in order to provide timely advice to all those interested. For more information about this project, as well as the next contractual stages, please contact the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.