Colombian government cancels $2bn Odebrecht toll motorway deal

The Colombian National Infrastructure Agency (ANI) is cancelling a 25-year public-private partnership (PPP) with a consortium led by Brazilian contractor Odebrecht to build a 510km toll road in the northwest of the country.

Colombian authorities say they have evidence of a bribe paid to a government official for the project by Odebrecht, whose South and Latin American contracts are unravelling in the fall-out from the vast Petrobras corruption scandal in Brazil.

The deal, which was priced at 3.6 trillion pesos (about $2bn in 2011), was to construct a road between San Roque and Puerto Salgar. This covers a length of Highway 45, which runs north-south from Ecuador through Bogotá to the Caribbean Sea.

After several weeks of negotiations, ANI reached an agreement for the cancelation with the consortium, and the government’s trade and industry regulator issued a resolution ordering the immediate termination of the contract.

ANI released a statement that said: "The agreement with the concessionaire means that it will waive its economic claims, made before the case went before an arbitration tribunal, for 700bn pesos [$250m]."

Work to widen the road to a four-lane dual carriageway began in 2011 and a little over half has been completed

The concessionaire for the road was Ruta del Sol SAS, made up of Norberto Odebrecht, Odebrecht Investments and Infrastructure, Estudios y Proyectos del Sol, Episol and CSS Constructores. Odebrecht owned 62% of consortium’s equity.

Colombia’s public prosecutor said it has evidence that to win the contract in 2009, Odebrecht paid $6.5m to former transportation vice minister Gabriel García.

Work to widen the road to a four-lane dual carriageway began in 2011 and a little over half has been completed.

The concession will be paid some money for the work it completed, based on a "liquidation formula" set out in Colombian law.

The Ruta del Sol, or Solar Highway, is being built in three stages, of which the second is the longest. The first 78km length was built by ConConcreto de Colombia and Ieacsa of Argentina. The third stretch will be 223km, and will be constructed by Impregilo of Italy with finance from a Colombian pension fund.

Colombia’s decision to terminate the concession for the second stage follows an announcement by the Peruvian government that it was cancelling a $7bn pipeline project led by Odebrecht.

Odebrecht, which was the largest construction group in South America, has acknowledged its past misdeeds, paid $3.5bn in fines so far, and is attempting to rehabilitate itself with its clients in Brazil, Latin America and elsewhere.

Image: A bridge under construction in 2013 on the Highway of the Sun (Aguila Consada)

Further Reading:

Story for GCR? Get in touch via email: [email protected]

Latest articles in News