Project Name: MAR2 Expressway PPP Project -Colombia

Host Country: Colombia

Project Duration: 2016-2040 (send this phrase to specification)

Project specification：

Located in Antioquia Department, MAR2 Expressway PPP Project in Colombia connects several cities and towns, including Ca？agordas, Uramita, Dabeiba, Mutatá, El Tigre and Necoclí. The franchised road is 277.7 km long in total, which is divided into six bidding sections. The first five bidding sections are 168.8km-long for construction (including 151km for repair and optimization and 17.7km for new construction, among which the largest single project is a 2.2km-long single-bore tunnel). The sixth bidding section is 109km long, which is delivered to the project company after EPC completed other contractors, and the project company will be responsible for operation and maintenance of it together with other bidding sections. The franchise rights mainly covers road research and design, financing, handling and acquisition of environmental impact assessment permits and other permits, land acquisition, social management, new construction, operation, maintenance and handover. The franchise period of MAR2 project is 25 years, including 1 year for pre-construction, 5 years for construction, and 19-23 years for operation. The project officially started on January 11th, 2017, and is now under construction. Since the beginning of the project, in terms of operation and maintenance of the franchised road, this project has maintained a good record of “no penalty” compared with the government’s operation and maintenance standards.

The Colombian government adopted international public bidding for this project, and the bidding consortium consisting of 6 member units, led by CHEC won the bid for this project on September 22nd, 2015. The project company (AUTOPISTAS URABA S.A.S) was incorporated on October 26th, 2015 and the franchise agreement was formally signed on November 25th, 2015, when the franchise period started. During the bidding period, CHEC held 30% of the shares and later, increased the shares it held to 65%; SP Ingenieros, a local shareholder of Colombia, held 15%, and Ethuss Group, another local shareholder of Colombia, held 20%. The EPC contractor consortium, also composed of these three units, shared the EPC contract share in proportion to the shares and assumed the responsibility for the construction and completion of the project.

The total investment in the project is about 1.07 billion US dollars, which comes from three sources: shareholders’ investment, project income during the construction period (including annual fixed subsidy from the government, road operating income, etc.) and bank loan. On July 24th, 2019, the project closed a non-recourse project financing of up to 660 million US dollar with the bank consortium consisting of China Development Bank (CDB), Sumitomo Mitsui Banking SMBC, and FDN (Financiera de Desarrollo Nacional), with loan terms of 12 and 16 years. At the same time, the financing plan covers the interest rate and currency hedge products for up to 12 and 16 years. The project company received the first loan on November 5th, 2019.

Characteristics and Significance of the Project：

As the second largest PPP project in Colombia’s national 4G highway program, MAR2 project passes through the economically developed regions of Colombia, and is the second national road to an estuary of Atlantic Ocean. It has a special impact on the Colombian economy and is a typical livelihood project in Antioquia Department and Uraba Region. As an overseas infrastructure investment demonstration project of CHEC, this project has been positioned as the first PPP project of Chinese enterprises in Latin America by the National Development and Reform Commission, and as the first PPP project of Chinese enterprises in the Americas by the Ministry of Finance. As the only joint venture 4G highway project involving investment from China and deep cooperation between the Chinese side with the local partners, which is under standard governance of the project company. It is also a high-level visit project between the two countries, so both the Chinese and Colombian governments attach great importance to this project and this project will be built into a model of bilateral cooperation between China and Colombia.

Due to the positive influence of the successful completion of the financing closure for Mar2 project, CHEC was awarded the “Latin American Investment Newcomer Award” by Proximo on May 27th, 2020, and “Investor of the Year 2019” by LATINFINANCE in September, 2020, which is another heavyweight award of CHEC as an investor. (See the attachment for details). The two awards in 2020 also illustrate the golden content of the financing closure for this project. Furthermore, it’s also a built up leading to a position and extensive influence of CHEC in Latin American infrastructure investment projects as an investor, and laid a solid foundation for CHEC’s subsequent development in the Latin American market.