Colombia will seek to improve transportation, energy, communications, and water and sanitation services by boosting private sector participation in infrastructure projects with the help of a US$14.2 million loan from the Inter-American Development Bank.
The loan is the third stage of a program launched in 1996 to support private participation and concessions in infrastructure at national, departmental, and municipal levels in Colombia.
"The satisfactory execution of the program's first and second stages is due in large part to the strength of the government's commitment as well as technical support from the Bank," IDB's team leader Pablo Guerrero said.
Over the years, Colombia has increasingly thrown open infrastructure projects to all players through a series of mechanisms, including concessions, strategic partnerships, privatizations, and private administration and management of public assets. Yet, "it still requires a significant investment effort to develop and modernize its infrastructure," Guerrero added.
The government now faces the challenge of strengthening and adapting the regulatory framework and the technical and institutional capacity in certain areas, mainly those that have not yet benefited as much as others from private involvement.
"The institutional and regulatory structures of other sectors such as, health, education, comprehensive care in early childhood, and justice, will be part of the third stage to allow the Colombian government to identify the adjustments necessary in their organization and operations," Guerrero said.
In the energy sector, regulatory development and adaptation should continue in the electricity, mining, and hydrocarbon areas, whereas in telecommunications the focus is on boosting community-based rural telephony programs and broadband connectivity for public institutions such as municipal governments, schools, hospitals, and farmers organizations. In the transportation sector the loan will help to develop technical, legal and financial studies needed to structure mid-size cities’ projects with private participation.
The loan is for a 25-year term with a five-year grace period, at a LIBOR-based variable interest rate.