Americas: LatAm leads innovation

Americas: road by the windmill farm

Canada dominates PPP activity, while infra opportunities are on the rise in the US. In LatAm, the spotlight is on digital and electricity interconnectivity.

 American countries ranked
#5Canada
#7United States
#20Chile
#26Colombia
#27Mexico
#32Peru
#45Brazil

Digital interconnectivity

Mega interconnectivity projects in LatAm are creating the digital infrastructure of the future.  Grupo Gtd, a Chilean telecommunications company, is installing a 3,500km-long submarine fibre optic network from the north to the south of Chile. The new digital connectivity will allow further investment to exploit the country as a gateway to Colombia and Peru, allowing tech companies to expand their operations in the country. In April 2019, Google completed a 10,000km subsea cable connecting California to Chile.  

On the other side of the continent, Brazil is working on the innovative 9,300km EllaLink subsea cable system aiming to link Brazil with Portugal and Spain. In May 2018, equity fund Marguerite joined the project as a financial sponsor. The project constitutes the first transatlantic system connecting Europe and Latin America without having to go through the US.  

In July 2019, Chile also advanced on its plans to develop a 24,000km fibre-optic cable to connect South America with Asia Pacific – Argentina, Brazil and Ecuador have expressed interests to participate, after a USD 3m feasibility study agreement with the Development Bank of Latin America.

Latin America re interconnectivity projects.

Country summaries

#5 Canada

Canada has proactively maintained its attraction for private and institutional investors through its strong PPP procurement activity, which continued apace during 2019. Although the focus is largely on traditional infrastructure, and most specifically transport, opportunities in social infrastructure PPPs remain abundant.

In May 2019, a consortium led by Canadian construction company Aecon reached financial close on the Highway 401 PPP in Ontario, after raising CAD 639.8m. On June 2019, the government of British Columbia pre-qualified three bidders for its CAD 2.83bn Broadway Subway PPP, a 5.7-kilometre extension of Vancouver’s Millennium Line. 

On June 2019, non-for-profit care provider Providence Health Care issued a request for qualifications (RFQ) for the first phase of a new CAD 1.9bn hospital campus in Vancouver.

The Canadian PPP market has been robust for more than 15 years with authorities having procured more than 200 PPP projects. The scale of greenfield development is also having knock-on effects in the secondary market. In February 2019, Toronto-based Fiera Infrastructure acquired a majority shareholding in contractor EllisDon's 10-strong portfolio of transportation and social infrastructure PPPs.

#7 United States

Amid revived determination at both federal and state-level to address the country’s ageing infrastructure, all eyes are on the strategy used to improve the situation. In April 2019, President Trump announced an agreement with Congress to pursue a USD 2trn investment in infrastructure to improve the country’s highways, railways, bridges and broadband. However, discussions with the US government on this issue has once again come to a halt.

PPPs have made some notable appearances. In June 2019, the state of Maryland approved a USD 11bn road PPP scheme, praised as the largest highway PPP in the world. The project entails the upgrade of 70 miles of the interstate highway on the Capital Beltway encircling Washington, DC, widening existing lanes and adding new ones.  Whilst investment in transport is welcome, the sector is changing in other ways. Mobility is firmly in the crosshairs of disruptive, app-based services – including ridesharing, car-sharing, and last-mile services such as e-scooters – which are gaining popularity among commuters.

The country’s renewables sector leads on the adoption of corporate PPAs, with the likes of Facebook, Microsoft and Starbucks having dominated 2019 deal flow. In one such deal, Enel Green Power signed a 12-year PPA with food and beverage giant Mondelez in July 2019. 

#20 Chile

Despite positive developments in the country, Chile fell from the 11th position in 2017 to 20th in 2019 due to deteriorations in economic measurements, tax environment, political stability and private participation. 

Commodity prices have a wide impact on the region’s economic growth. Chile’s economy is significantly dependent on the export of metals (most importantly copper) – an industry worth USD 31.5bn a year, which represents 10% of the national economy. China is the country’s major trade partner, making Chile significantly dependent on China’s growth. 

This effect was apparent in the PPA deal flow of Chile, the most mature PPA market in Latin America which has attracted, among others, technology and telecommunication giants and the mining sector. As the availability of PPA off takers is dependent on the economy’s conditions, a drop of commodity prices over 2018 led to a slowdown of PPA activity in 2019. 

In 2019, the Chilean government announced the Chile Sobre Rieles – a USD 5bn investment programme in the country’s railway network – and a USUSD 7bn road infrastructure plan. 

#26 Colombia

Colombia’s score improved from 2017’s Index thanks to steep differences in ease of doing business (53.96% up to 79.58%) and its tax environment (50.64% to 80.40%) indices. The country’s attractiveness is still scarred by the 2016 Odebrecht corruption scandal surrounding the cancellation of the Ruta Del Sol 2 highway concession, but thanks to the fourth generation (4G) toll road tender programme launched in 2016 it is slowly recovering. The latest 4G project to close was the USD 594 million Pasto Rumichaca road PPP in July 2019 after being awarded to Sacyr and Herdoiza Crespo Construcciones.

In July 2019, the country put in place new rules for its renewable energy auctions to deliver 4.3GW of solar capacity, after the first attempt failed due to lack of competitive conditions.

#27 Mexico

Mexico’s president, Andrés Manuel López Obrador (AMLO) began 2019 with a surge of high ambitions as well as daring reshuffles to the country’s infrastructure plans, including the controversial cancellation of the USD 13 billion Texcoco airport in October 2018. On the other hand, Mexico’s renewables market has enjoyed an upward trend in terms of deal flow, adding approximately 800MW of additional capacity in 2019 from solar PV and onshore wind procurements.

In July 2019, finance minister Arturo Herrera announced a stimulus package of USD 25bn to boost private investment in infrastructure.

#32 Peru

Peru is evaluating the feasibility of an electricity interconnector, with the support of the Inter-American Development Bank, with the possibility of Argentina getting involved. The project – connecting Arica in Northern Chile and Tacna in the south of Peru – is anticipated to provide flexibility to the region’s transmission systems and facilitate the addition of further renewables capacity. In May 2019, the two governments reviewed the latest economic and technical updates of the feasibility study.  

Peru garnered a lot of interest in 2019 with its high-speed broadband PPP tenders. Six concessions were awarded in January, four to a Yachay Telecomunicaciones, Yangtze Optical Fibre and Cable Company consortium, and two to a consortium featuring DHMONT, Telkom and Bantel.

Peru’s PPP authority, Proinversion, has a pipeline of 51 projects, while also considering adding three new ones for the period until 2022.

#45 Brazil

The country’s corruption scandals around state-owned oil company Petrobras have affected the country’s business environment. President Bolsonaro’s announcement of Petrobras’ privatisation, as part of a wide range of privatisations aiming at reducing corruption and the state’s debt, has been well received by the business community. According to public statements, approximately USD 20bn of assets have been privatised since the new president took office in January 2019, including the offload of USD 12bn of Petrobras’ assets.

In March 2019, Petrobras handed over majority control of gas distribution network Transportadora Associada de Gas (TAG) to France’s Engie and Canada’s CDPQ in a USD 8.7bn deal. The transaction was completed following a landmark ruling from the Brazilian supreme court allowing the sale of subsidiaries of state-owned companies without congressional approval.

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