Q: What are the main pillars of the government’s new concessions plan?
A: The bulk of the plan will deal with transport infrastructure. This relates to the rapid growth in traffic flows that our roads and airports are experiencing. We’re talking about growth rates of 10% in the past decade. Looking forward, we expect this trend to continue due to increasing levels of GDP per capita [the Chilean economy is projected to grow at about 3.5% annually in the coming years]. This translates into growing rates of road use, but also increasing air traffic, a sector in which low-budget airlines are booming.
Q: The plan includes about 60 projects worth a total of $14.6bn. How are you going to implement it?
A: We are planning to tender projects [worth] about $2.8bn per year. There are about 22 road projects, half of which entail the renewal of existing concessions that are about to expire. The programme is still in its infancy. We are getting started now; we had a few tenders in 2018 and another few at the beginning of 2019.
Q: All these projects are going to be developed under concession schemes. What are the return rates they offer to investors?
A: The outcome of the tendering process will eventually determine their return rates. What I can say is that they all offer high traffic flows, and the experience of the past 20 years tell us that [under these circumstances] they are very profitable.
Q: What is the profile of the investors you are looking to engage with?
A: We are looking for two types of investors. First, investors such as investment funds that have an appetite for long-term investments with rates of returns higher than those offered by government bonds. Originally these investors used to be interested only in mature projects, but more and more often they are taking positions in greenfield projects.
We are also interested in getting in touch with building companies for the development of the project itself. Something that makes it even more attractive for them is the fact that now they can join the project consortium with a certain level of equity and leave the rest to the investment funds. That was not available before because the funds would only go for developed projects. But now that they back greenfield projects, if a building company doesn’t want to take on such a long-term commitment on its own it can just own a part of the consortium, and even leave the consortium once the development phase is over.
Q: Do you feel the market has an appetite for these projects?
A: There is much interest in infrastructure investment at the moment. That has to do with a wide range financing options at convenient rates. Besides, Chile has an adequate risk profile thanks to its macroeconomic performance, political stability and 26-year-old regulatory scheme for public-private partnerships. It is a tested, transparent, competitive system offering equal conditions to any investor. The monitoring by local authorities is also rock solid, in both the development and operational phase. The same goes for dispute resolution rules and processes, which have been tested for years now.