Carlos Slim Group to Take Over Near-Billion-Dollar Magdalena River Project?

Two companies with ties to Mexican mogul Carlos Slim are looking to take over the bulk of a $857 million USD project to improve transport on the Magdalena River in Colombia. The major infrastructure bid was previously won by a consortium called Navelana, with Brazilian engineering giant Odebrecht controlling almost 90% of the project, per Reuters.

But the embroiled Salvador-based company is now tangled in a domestic corruption scandal, which on top of other problems has stalled progress and increased concerns in Colombia that it will be difficult to find funding to carry out the necessary dredging. Work that was planned to begin in June this year has still not been carried out, according to Reuters.

Two companies that are part of Carlos Slim’s Grupo Carso have expressed interest in taking over Odebrecht’s role in the massive Magdalena River project. (Credit: ITU Photos)

Now that it is starting to look like everyone would be better off if Odebrecht stepped aside, Mexico’s richest man wants in. “We have received a letter of interest from an alternative majority group — two companies from the Carlos Slim group in Mexico,” said Luis Fernando Andrade, interim director of Cormagdalena, the government agency that is overseeing Navelena’s work on the Magdalena.

According to Colombian magazine La Semana, there is still some red tape to clear for the two companies, IDEAL and FCC Americas, both of which are part of Carlos Slim’s Grupo Carso. FCC Americas has already been involved in several notable projects in Colombia in recent years, including dredging the Bogotá River, several road projects, and the construction of a tower at the capital’s El Dorado International Airport.

To approve a transfer in the stake-holding, Cormagdalena will require technical and financial documents — along with a letter of commitment from funding partner Goldman Sachs — that include a contingency plan to mitigate the possibility of a draught hitting in the first three months of 2017. These items are expected to submitted by October 28, according to the newspaper El Heraldo.

The mighty Magdalena River was once the industrial heart of Colombia. (Credit: Cormagdalena)

The river project is a long-term effort to make the mighty Magdalena, Colombia’s largest river and historic industrial artery, more navigable. By 2030, the government hopes that improvements will lead to five times more cargo being transported on the river — reaching 10 million tonnes per year — while cutting transport time in half and saving vast sums for everyone in the supply chain.

Commercial barges can currently can only travel from the Caribbean port of Barranquilla as far as Barrancabermeja, which sits some 250 miles from the capital. By the time the project is completed — the original schedule had a projection of 2021 — much larger vessels will be able to get much closer to Bogotá (and Colombia’s second city, Medellín). Days will be saved, and shippers will not have to rely as heavily on the trucking industry to get goods to their destination.

“It’s much cheaper because of the large quantities,” Carlos Nuñez, former head of Cormagdalena, told Reuters in 2015. “A convoy of barges can shift 7,200 tonnes in one trip. To move 7,200 tonnes by road requires 240 tractor trailers. Logistics savings could be between 30% and 50%, which will make national products more competitive for export.”