BOGOTA Feb 22 Colombia's government has begun
termination of an $861 million contract to restore navigability
of the Magdalena River that was led by Brazil's Odebrecht, the
government said on Wednesday.
The decision was made after Odebrecht, which faces
allegations of corruption in Colombia and other Latin American
countries, failed to provide funding to develop the project or
cede the concession to another company.
"We will start the termination process and directly assume
the dredging of the river via (government) public works," said
Luis Fernando Andrade, director of Cormagdalena, the government
agency in charge of the river tributary.
PowerChina has expressed interest in taking Odebrecht's 87
percent stake in the Navelena consortium, which ran the dredging
project. It is conducting technical, legal and financial
analysis of the project, the government said.
"If the contract cannot be effectively delivered with
PowerChina Limited Colombia, Cormagdalena will guarantee normal
navigation on the Magdalena River by signing public works
contracts," Andrade said.
Odebrecht received the concession in 2014 and construction
was originally slated to begin in June 2016.
The government's decision came after Japan's Sumitomo Mitsui
bank pulled $250 million in financing from the project in
January as the Odebrecht scandal was erupting.
U.S. prosecutors have accused Odebrecht of paying bribes
connected to projects in countries including Brazil, Argentina,
Colombia, Mexico and Venezuela between 2002 and 2016. The
company has admitted to paying bribes to officials in 12
countries, mostly in Latin America, to help secure lucrative
The Navelena consortium, which also includes Colombia's
Valorcon, had until Wednesday to find alternative financing, or
the contract would be scrapped.
The dredging would increase cargo transport fivefold on a
256-km (159-mile) section of the river to some 10 million tonnes
by 2029 to reduce freight costs and help increase exports by
commodities producers and agricultural companies.
Navelena sought to benefit from its investment in the
project through toll rates for seven years after completing the
modernization of the 908-km (564-mile) waterway.
(Reporting by Helen Murphy; Editing by Peter Cooney)