Colombian Road Concession Program 2013 - 2014 Projects and Financing Issues

1. Colombian Road ConcessionProgram 2013 - 2014 Projects and FinancingIssues Luis Fernando Andrade Moreno President Agencia Nacional de Infraestructura June, 2013

2. Agenda • The target and ground preparation • The plan in motion: 4th generation of roadway concessions • The project financing challenge • The timetable

3. The difficulty: Infrastructure deficiency Source: World Economic Forum. The Global Competitiveness Report 2012-2013.

4. The difficulty: Infrastructure deficiency Historicallowinvestmentin transportationinfrastructure Source: Own calculations using DNP investment data

5. The actions carried out by the current Government • Creation of a PPP Law (Ley 1508 de 2012) Improved legal framework • Creation of the National Infrastructure Agency (ANI) • Governance • Capability Building intitutional capacity • Design of a comprehensive infrastructure investment program based on PPP scheme • Robust structuring • Improved and standardized contracts • Effective project management with better controls and monitoring systems • Speeding up execution • Removing bottlenecks Moving forward our infrastructure

6. Other Government actions • Additional actions to set up a supportive regulatory and legal framework for private investment • Infrastructure Law project in Congress • Improving regulation to mitigate risks associated to land acquisition, social and environmental management, and utility network displacements • Additional contractual provisions to facilitate resolution of Force Majeure events • Expedited conflict resolution mechanism in standard contract

7. Agenda • The target and ground preparation • The plan in motion: 4th generation of roadway concessions • The project financing challenge • The timetable

8. How will the Government deliver on its promise of closing the infrastructure gap? The 4G Program • US$26 billion investment program • Around 40 toll road PPP projects • Construction in over 8,100 km of nationalroadways in thenext 8 years. Estimated investment profile for the Program (US$ Billion of 2012)

9. RIOHACHA NationalroadwaynetworkunderConcession: Existing and Upcoming Paraguachon SANTA MARTA BARRANQUILLA VALLEDUPAR CARTAGENA Cuestecitas Carmen de Bolívar Buenavista San Roque San Juan SINCELEJO San Pelayo Ponedera La Paz Achí Cruz del Viso Carreto Necoclí MONTERÍA San Marcos Toluviejo Palo de Letras Caucasia La Yé Simití CÚCUTA Aguachica Aguaclara Planeta Rica Pamplona El Tigre B/MANGA Barrancabermeja ARAUCA Remedios Santa Fé de Ant. Pto. Berrío Tame Sogamoso MEDELLÍN Camilo C Barbosa PTO CARRENO PTO CARRENO Bolombolo Zipaquirá Pto. Salgar TUNJA La Manuela YOPAL Sisga Villeta MANIZALES PEREIRA El Secreto Sopó Cartago Pto. Arimena Calera BOGOTA ARMENIA Cáqueza Girardot Ibagué Puerto Gaitán La Paila Espinal Buenaventura VILLAVICENCIO Buga Granada CALI Santander De Quilichao NEIVA POPAYÁN Chachagüí MOCOA PASTO

10. 4G Concession Contract: Basics

11. 4G Concession Contract: RiskAllocation • ANI’sRisks • Force Majeure events • Non insurable events (e.g. natural disasters) • Land acquisition* • Social consultation* • Environmental licensing* • Traffic (Aggregated Income) • Utility networks (non identified networks) • * Assuming concessionaire’s proper management • Concessionaire’sRisks • Construction (excepttunnels) • Operation and maintenance • Financing • Change in construction and operation & maintenance input prices • Landacquisitionmanagement (withcontrol and supervision of ANI) • InsurableForceMajeureevents • Traffic (liquidityrisk) • Macroeconomicrisks • Changes in law • SharedRisks • Construction (tunnels) • Land acquisition (cost overruns) • Environmental and social management (cost overruns in environmental compensations) • Utility networks (cost overruns)

12. Agenda • The target and ground preparation • The plan in motion: 4th generation of roadway concessions • The project financing challenge • The timetable

13. 4G program financing needs Needs: Funding US$26 billons to be invested during the next 8 years and repaid with long term flows starting after construction phases Investment & financing Equity Debt Note: Preliminary and estimated values, subject to modifications, adjustments and corrections.

14. 4G program financing constraints • Debt required for 4G concession program is large relative to the Colombian financial market Local longtermfinancingsources • Note: Values in USD Billions, Updated at Dec-2012

15. 4G program financing: The proposal

16. Mixedfinancingstrategy Financial Closing Debt commitments for 1/3 of total financing needed • Bank loans • Loans from other infrastructure investors • Refinancing after construction phase • Asset Based Securities • Long term loans from institutional investors Signing of Contract End of the contract End of construction phase certification Retribution flows according to availability* Refinancing during construction phase • Securities with credit risk enhancement • Loans from infrastructure investors/funds * Discounts are applied up to a threshold related to the infrastructure availability (availability, service level and quality standard)

17. Securitizationstructure Underwriting commitments Originators Issuers Securities Investors Tranchej Inv. 1 UF 1 % UF 1 … Inv. n - 2 … … … Cession Contingent purchase Lead Bank/Fund Tranche k Substitution / firm commitment Multilaterals/ development Banks % UF m UF m $$$ $$$ 17

18. Remaining Risks: Mitigation alternatives MODOS

19. Agenda • The target and ground preparation • The plan in motion: 4th generation of roadway concessions • The project financing challenge • The timetable

20. 4G Program Timetable

21. ThankYou • www.ani.gov.co • Twitter • @ANI_Colombia • Facebook • http://www.facebook.com/agencianacionaldeinfraestructura • http://www.facebook.com/luisfernando.andrademoreno