This content is from: Local Insights

Colombia

In early December, Ferrovias, the government agency in charge of the Colombian railway network, published the rules for railway concessions for the next 30 years. Concessions will be awarded for the modernization, maintenance, operation and exploitation of the railways.

To participate, a bidder must:

  • show relevant technical experience which can be demonstrated either through a consortium member or a contractor; and
  • have a net worth of at least US$30 million either jointly or as a consortium member holding a 33% interest.

International bidders may participate individually or jointly, either through a consortium or temporary corporate agreement. Each consortium member is responsible jointly under the proposal and must attach a commitment insurance policy.

Additionally, the contractor must provide a guarantee covering the accuracy of its information, fulfilment of contracting duties, reversion, labour duties, third party damages and project contingencies.

In addition to these main obligations, the contractor must guarantee the provision of services, finance the project, set up a trust, obtain all required permits, return the project to Ferrovias on completion and meet all legal liabilities.

The successful bidder must set up a trust to isolate public funds from insolvency. The contractor will assume all risks. Ferrovias will not assume geological risks, but in the cases of terrorism, earthquakes, avalanches or floods, it will reimburse the contractor for modernization work. Ferrovias will not assume commercial risks.

Under the concession, the government cedes possession of the railway, its use, and the right to sub-contract and to assign assets for debt purposes as well as rights over existing agreements.

The concession agreement, governed by public law, will include the so-called 'mandatory clauses'.

Luis Nieto

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