The Latin Asia Business Forum 2007

Infrastructure Opportunities in Latin America

October 2, 2007

Natan Rodeguero

Project Director at InfoAmericas Sao Paulo, Brazil

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INFOAMERICAS HISTORY

InfoAmericas is the leading business intelligence provider for Latin America.

Since 1993, InfoAmericas completed over 800 research and business intelligence projects across Latin America and the Caribbean. Our experience covers virtually every industry and research methodology.

InfoAmericas helps companies develop solid business intelligence for implementing successful market strategy. We work with companies to find, measure, and exploit market opportunities.

InfoAmericas is a recognized thought leader. Tendencias, our monthly newsletter, is one of the region’s most insightful analysis papers with over 14,000 active readers and is available for browsing at: http://tendencias.infoamericas.com. Our opinions and analysis are regularly quoted and reprinted in leading media.

InfoAmericas employs over 30 full-time consultants amongst its three offices: Miami, Mexico City and Sao Paulo, which are used as central points for regional studies.

Over 70% of InfoAmericas’ projects are multi-region in scope.

InfoAmericas is a member of SCIP since 1997.

800+ projects 14+ years of expertise 70% of projects are pan-regional

22 industries covered 4 in-depth sectors

30+ Full time analysts 25% MBA / MSc 80% USA / EU experience 100% LatAm experience

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70% of our projects are multi-market

Our business in numbers

InfoAmericas' work was invaluable in redirecting our distribution partnership and establishing us as the leading vendor in the region.

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Partial client list

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Infrastructure Spending in Latin America

a brief historical perspective

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Commodity Price and Infrastructure Spending in Latin America 1970 to 2000

0

100

200

300

400

1970 1975 1980 1985 1990 1995 2000

Year

Commodity Price

0

1

2

3

4

Expenditure (% of GDP)

Average Commodity Price Investment on Infrastructure (as % of GDP)

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Private Investment in Latin America

Private Investment by Sector (US$ Mn)

05,000

10,00015,00020,00025,00030,00035,00040,000

1990 1995 2000 2005

Year

Energy

Telecom

Transport

Water and Sewage

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Lessons learned

Private investments will be successful if consumers are willing to pay for the service

Basic public services are considered basic human rights

There have to be guarantees to political risk, currency devaluation, support against corruption, and legal stability

Private Investment is not feasible in all areas (roads between small cities, rural areas, low economic activity areas, etc)

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New Funding Model for Infrastructure

Sectors of high public demand and low returns – water, sewage, roads – are publicly funded

Projects subsidized through the use of social tariffs and financed by NGOs like World Bank or by third party country agencies like The Export-Import Bank (Exim Bank)

Sectors with higher ROI in areas such as telecom and energy attract the most private investment

Divestiture and Greenfield are the most common models

Most infrastructure projects (except Telecom) are a collaboration between private and public investment

Private Investment Projects by Type

0

10,000

20,000

30,000

40,000

50,000

60,000

1990 1992 1994 1996 1998 2001 2003 2005

Year

US$ Mn

Management andLease Contract

Greenfield

Divestiture

Concession

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2007-2015: Latin American Infrastructure Opportunities

Infrastructure Projects for the next 24 months

High commodity prices and high demand for reliable energy are the reason behind the number of projects in O&G (Oil and Gas)

Low MediumHigh

Oil&Ener Mining Ports Ener GenWater, Waste

Argentina

Brazil

Chile

Colombia

Mexico

Peru

Venezuela

Caribbean

C. America

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Panama Canal’s Third Set of Locks Project

Expansion Plans will cost US$ 5.25 Bn

Project Broke Ground – September 3rd, 2007

Project Completion Date - 2015

Project Mangers: CH2M Hill global leader in full-service engineering, consulting, construction, and operations

Sub Contractors: Request for Qualification is currently being reviewed; shortlist to be ready in November 2007

Panamax

Panamax

Pospanamax

Pospanamax

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Brazil – PPP (Public-Private Partnership) & PAC (Growth Acceleration Program)

Infrastructure investments of US$250 Bn from 2007 to 2011

Energy: US$140 Bn (generation, transmission, oil, natural gas, renewable fuel)

Transport & Logistics: US$30 Bn (roads, railway, ports & maritime, airports, ‘hydroways’)

Social & Urban: US$85 Bn (water&sewage, urban transportation, ‘Light for Everyone’, irrigation)

A result of sound macro-, fiscal, and regulatory policies, and investment climate

São Paulo and Minas Gerais states are leading the trend

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Brazil – ethanol

US$9 Bn being invested in new sugar mills to boost ethanol production

Aiming to double exports by 2010

Brazil accounts for 53% of global ethanol trade; Europe is at a distant 12%

Brazilian sugar-cane ethanol is more efficient to produce than the corn-based fuel made in USA

75% of new car sales are ‘flex-fuel’ (run both on gasoline and/or ethanol)

Electricity generated by bagasse (cane-waste)

Labour generation in farming and processing

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Mexico – National Program of Infrastructure

Mexican government will invest US$ 226 Bn on the National Infrastructure Program; all projects to be finished by 2013:

17,000+ km of highways/roads will be rebuilt (26.1 Billion USD)

Suburban trains throughout the Metropolitan area of Valley of Mexico (4.4 Billion USD)

13 new ports for cruise ships; 25 ports will be modernized (6.45 Billion USD)

3 new regional airports; 31 airports to be expanded (5.4 Billion USD)

Improve telecommunications, mobile, internet and bandwidth services (25 Billion USD)

Increase accessibility to potable water (18 Billion USD)

Increase Hydrocarbon production and other sources of energy (141 Billion USD)

Most of the bidding for the over 100 projects are still being accepted visit http://licitaciones.sct.gob.mx/

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Mexico - Port in Punta Colonet

Building of a new sea port in Punta Colonet: estimated cost 24.5 Billion USD

Increasing inflow of goods from Asia justifies the investment

US Seaports like Los Angeles and Long Beach are reaching capacity

Mexican Government is preparing the bidding, which should start the end of 2007

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Mexico - Hydrocarbon

Description 2001-2006 2007-2012

Production of petroleum (mmbd) 3.3 2.9

Production of Natural Gas (mmcfd)

4.7 5.5

Mexico’s main oil field Cantrell reserves are diminishing

Government investing US$ 108 Bn to maintain reserves, guarantee domestic consumption and fulfill export promises

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Mexico’s Hydrocarbon – Chicontepec Project

Oil fields north east of Mexico City believed to be able to produce 837Bboe

Planned to drill 1000 new wells by 2009

US$14.7 Bn will be invested between 2007-2017

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Mexico’s Hydrocarbon – Ku-Maloob-Zaap Project

Three new fields in the Chiapas -Tabasco area together hold 350m barrels of reserves.

Installation of two nitrogen plants in Olmeca.

constructing an infrastructure to handle the production of residual reserves;

four marine pipelines with a total 14.4km length,

began operations of its "Senor del Mar" floating production, storage and dispatch unit

By 2010 field will produce 800,000 bbl/d at a cost of 2.39 million USD

Project led by state owned Pemex’s Exploration and Production Unit

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Colombia - Infrastructure Project: Ruta del Sol

To reduce travel time between the Capital and the Caribbean coast

estimated cost: US$ 2.5 Mn

construction of a double lane road between Tobiagrande - Puerto Salgar

rehabilitation of the existing road between Villeta - Gauduas- Honda

rehabilitation of existing lane and construction of second lane between Puerto Salgar - San Alberto

rehabilitation of existing lane and construction of second lane between San Albert - La Mata- La Loma- Bosconia- Y de Cienaga

Colombian government hiring an Investment Bank to structure and manage the concession.

Bidding process should start first quarter of 2008

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