Ruta del Sol – The Bogota/Carribean Highway Is One of Latin America’s Largest Infrastructure Projects

Said to be second only to the Panama Canal expansion project, the infrastructure megaproject known as the “Ruta del Sol” or “Sun Road” has major financing in place, the project is approved, and was recently tendered for bids. This post takes a high-level look at the Ruta del Sol and asks what it will mean for future economic development along its route, including tourism facilities, agri-business, manufacturing, business process outsourcing, transport, and real estate development.

Remember that where much of its population lives, Colombia is extremely mountainous. Driving on these highways (as I have), it is often more important to look at profile or relief maps than the overhead kind.  Long steep inclines and repetitive switchbacks along simple two-lane roads mean that the existing highways are punishing for commerce and even worse for tourism.

Ruta del Sol will run west then north from Bogotá, starting at over 9,000 ft elevation (2640m).  From there it will plunge down through the ridges and canyons of the Eastern Range of the Andes in Central Colombia into to the humid valley of the mighty Magdalena River (<500m).   It will achieves more than one mile in elevation drop in just the first 50 road miles. Ruta del Sol will end seaside by the Caribbean at the Ye de Cienaga (literally, the fork in the road at La Cienaga), between historic Santa Marta and the busy port of Barranquilla.  There, the Ruta del Sol will meet up with the Highway of the Americas connecting to Cartagena. Along the way are major intersections feeding traffic to the coffee zone, Medellin, and Valledupar on the Venezuelan border.

The highway/bridge/tunnel project will require feats of engineering.  On overhead maps, the Ruta del Sol resembles a central artery of circulation, even a spinal cord. But, it is vital to see how the project uses viaducts and tunnels to slice through mountains and fly over canyons.  This helpful presentation, in English, at proyectorutadelsol.org, helps to explain it all.  Check out the cool video and this newscast video.

Will it be a vital economic and social tool?  As violence has been receding in recent years, Colombians took to the highways, first in protected “caravans,” and now with plenty of visible security on rural roads, to reach their beloved fincas (farms) and the playas (beaches) of the north. The highways are choked with 60% commercial traffic, meaning much of what is made and shipped in Colombia travels this way — very slowly, very dangerously. Current roads are serious barriers to development as well as social improvement and peace. The need is great.

The strategy makes a lot of sense. Colombia has used public works and transportation in particular to great effect to solidify gains against the narco-violence. Examples include the Bogotá Project — building the Transmillenio surface transit system in Bogotá — and the modern metro and skyward cable cars in Medellin.  Another highway project connecting Cali/Buenaventura (the Pacific port town) with Bogotá and Venezuela to the east, was also recently announced, and another, called the Mountain Highway System, is in the planning stages in the Antioquia state around the industrial city of Medellin.  The road projects call to mind the US Interstate Highway System, which opened the US interior and connected its major cities and coasts with cheap, fast, flexible transit.

Though some financing is now in place, serious challenges lie ahead, given the world economic situation. Financing that has been announced includes the IDB’s US$1.3Bn for Colombia superprojects, chiefly the Ruta del Sol. The announcement came from IDB President Luis Alberto Moreno and Colombian Home Minister Oscar Ivan Zuluaga during the IDB’s 50th Annual Meeting, in Medellin (see prior post). Also in late March, Conpes, the nation’s economic and social policy council, announced its approval of the project, and Inco (Instituto Nacional de Concesiones, the Transport Ministry’s concessions authority) announced it was let out for bid by March 24. Here is a story on La Republica about it in Spanish.)  Expected bidders are said to include Conalvias with Impregilo and Bancolombia, according to Business News Americas. La Republicareports eight consortia are interested, with investment levels of US$7.5Bn, including three Colombian and two Brazilian groups. Financing for these consortia, however, beyond Bancolombia’s presence, is as yet unknown.

Details were revealed in December 2008 for achieving the three segments of the 1000-km, US2.6Bn Ruta del Sol project, including new tunnels, viaducts, toll and access points, and double-lane expansions of the roadway. The sheer scope and size of the project suggests that enormous legal bureaucratic hurdles lie ahead, in addition to the engineering and financing. In 2007, the Government chose the IFC as its financial advisor, and Bogata law firm Posse Herrera & Ruiz (partner Jose Alejandro Torres and partner Alessia Abello) was selected the legal advisor. (See note on LatinAmericanNetwork.com.)

The big slide presentation (linked above) also has up-to-date facts on the investment environment in Colombia generally and touted some large recent investments, including:

• South Africa’s SABMiller’s acquisition of the Bavaria brewer, at US$4.17Bn (2005)
• Alabama-based Drummond Coal doubling of coal production facilities. at US$1.5Bn (2006)
• Switzerland’s Glencore Investment’s acquisition of the Ecopetrol refinery in Cartagena for US$2Bn (2007)
• Brazil’s Votorantim US$490M acquisition of a 52% stake in the Paz del Rio steel plant (2007)
• Philip Morris’s US$300M acquisition of Coltabaco (2005)

The route maps, some technical information, and the like are included in the 62 highly-detailed slides.

IFC’s contacts in Washington, DC, are: 

Richard Cabello, Senior Investment Officer, International Finance Corporation, Tel: +1 202 458 8825, rcabello@ifc.organd Ari Skromne, Investment Officer, International Finance Corporation, Tel: +1 202 473 0484, askromne@ifc.org.

In Bogota, contacts are:

Maria Victoria Guarín, Investment Officer, International Finance Corporation Tel: +57 1 319 2372, mguarin@ifc.org, and Faice Gutiérrez, Investment Analyst, International Finance Corporation, Tel: +57 1 319 2353, fgutierrez3@ifc.org

In addition to the sources mentioned above, check out this and other Business News Americas stories. They seem to have gotten the best scoops on this lately in the English language press. This post is drawn from a variety of Spanish-language sources as well, including information on the Proyecto Ruta del Sol website.