China Co-Financing Fund for Latin America and the Caribbean provides loan for Gulf of Urabá Multipurpose Port Facility Construction Project

Project narrative

In March 2019, the the Government of Colombia granted — through its National Agency for Infrastructure — a 30-year private concession agreement to a French-Colombian consortium known as Puerto Bahía Colombia de Urabá S.A. Then, on April 13, 2022, Puerto Bahía Colombia de Urabá S.A. — a special purpose vehicle and joint venture of CMA Terminals Holding (CMATH) [22% ownership stake], Puertos Inversiones y Obras (Pio) SAS [14% ownership stake], Eiffage S.A [22% ownership stake], Fondo de Inversión en Infraestructura AM Sura – Credicorp Capital (UPLI) [8% ownership stake], Agrícola Santamaría SAS [6% ownership stake], C.I. Banafrut S.A [6% ownership stake], C.I. Unibán S.A [15% ownership stake], C.I. Tropical SAS [6% ownership stake], and Termotecnica SA [3% ownership stake] — signed a set of senior and mezzanine loan agreements for the Gulf of Urabá Multipurpose Port Facility Construction Project. The project’s $393 million senior financing was provided by the Inter-American Investment Corporation, Inter-American Development Bank and China Co-Financing Fund for Latin America and the Caribbean, together with a group of Colombian banks (Bancoldex, Davivienda and Financiera de Desarrollo Nacional). IDB Invest provided a $150 million, 17-year loan, while China Co-Financing Fund for Latin America and the Caribbean provided a $50 million, 17-year loan and three Colombian banks (Bancoldex, Davivienda, and Financiera de Desarrollo Nacional) provided loans worth $193 million in loans. The World Bank’s Multilateral Investment Guarantee Agency (MIGA) issued a 15-year guarantee to JP Morgan for a $103.7 million facility that it provided to Financiera de Desarrollo Nacional (FDN), a Colombian government-backed infrastructure development bank, which in turn on-lent the proceeds to Puerto Bahía Colombia de Urabá S.A. An additional $130 million mezzanine financing was provided by Global Infrastructure Partners. The aggregate proceeds of the financing packages represented approximately 77% of the $672 million total amount required to complete the project, with the balance contributed by the project’s sponsors. The project consists of the design, construction, operation and maintenance of a $673 million private greenfield multipurpose port facility located in the Gulf of Urabá — near the city of Turbo in the northern part of the Department of Antioquia — under a 30-year concession contract. It is expected to build up on existing and captive traffic (major shipping lines already call at Urabá despite the lack of modern port facilities), becoming the main outlet for Urabá’s banana and fruit exports, which represent 75% of Colombian banana exports. Due to its location and logistic cost advantages, it is also expected that Puerto Antioquia will divert cargo in/out of Medellin (the 2nd largest city in Colombia and main international trade region in Colombia), in/out Bogotá, and their surrounding areas. The project’s main components include (i) an offshore deck with 1337 meters of berth (570 for container, 537 for bulk & general cargo, 230 for RoRo) capable of handling super post-Panamax vessels; (ii) a 3.8km viaduct and access road that connects the offshore deck with the inland terminal; and (iii) 38ha inland terminal/logistic facilities, including a container yard, dry-bulk storage facilities, warehouses, inspection areas, maintenance and admin buildings and utilities. The project’s initial handling capacity is expected to be 600,000 TEU (expansible to 800,000 TEU), 1.15 million tons of general cargo per year, three million tons of bulk cargo per year, and 60,000 vehicles years. Prior to construction, the project site only had land access routes, but prior to the start of port operations, it is expected that there will be an alternate (13 km) road built in order to allow for the progressive expansion of port operations. The project was screened by the IADB and determined to be ‘Category A’ because its potential environmental and social impacts are diverse and irreversible. The main environmental and social concerns associated with the project are related to potential impacts to Indigenous Peoples; community health and safety impacts, particularly due to a marked increase in traffic during construction and operation; potential impacts to the marine environment from dredging and driving of piles during construction; occupational health and safety; and waste management. The project is subject to the following International Finance Corporation Performance Standards (PS): PS1: Evaluation and Management of Environmental and Social Risks and Impacts, PS2: Labor and Working Conditions, PS3: Resource Efficiency and Pollution Prevention, PS4: Community Health, Safety and Security, PS5: Land Acquisition and Involuntary Resettlement, PS6: Conservation of Biodiversity and Sustainable Management of Living Natural Resources, PS7: Indigenous Peoples, PS8: Cultural Heritage. Puerto Bahía Colombia de Urabá S.A., and Consorcio Terminal Marítimo Antioquia (COTEMA) — a consortium consisting of Eiffage Génie Civil Marine and Termotécnica Coindustrial S.A. — signed an EPC contract in 2020. Then, in February 2022, the EPC contractor was issued a ‘notice to proceed’. Construction began in April 2022. Dredging work was completed in August 2022. The project was originally scheduled to be completed in the first quarter of 2025. When the port is completed, it is expected to become the main outlet for banana and agricultural exports from Urabá. In addition, given the port’s location and expected savings in transportation costs for exporters, the port is expected to handle a major portion of cargo from the cities of Medellín, Bogotá, and their surrounding areas. Overall, the project is expected to generate over 1,200 direct jobs during construction, 700 direct jobs during the operation stage, and an estimated 14,000 indirect jobs.