The content has been shared, if you want to share this content with other users click here.
Chinese companies are making forays into Chile's infrastructure sector, including venturing into the local concession system long dominated by European operators.
Chinese construction group China Railways Group Limited (CREC) said earlier this year that it was confident about its bid to build a US$1.6bn high-speed train connecting capital Santiago with the coastal cities of Viña del Mar and Valparaíso in region V. "Chile is a very open and developed country," Yang Jinjun, CREC representative in Chile, Peru and Argentina, told BNamericas.
Last year, China Harbour Engineering Company (CHEC) became the first Chinese firm to make a bid for an urban highway concession in South America when it presented an offer for the US$800mn contract to build the second stretch of the Américo Vespucio Oriente highway in Santiago, which was ultimately won by concessionaire Grupo Costanera.
CHEC also presented the lowest bid for the construction of the US$160mn Las Palmas reservoir, and is awaiting for the contract to be confirmed by the country's comptroller general.
Matteo Addonizio, infrastructure analyst at BMI Research, told BNamericas that China's incursions into Chile's concessions system are a new trend.
"To some extent it's reflective of the opportunities in the market," he said. "Chile is one of the markets that is low risk compared to regional peers – it has a strong project pipeline and a strong record in project development."
China's interest in Chile is poised to grow even more under the administration of president-elect Sebastián Piñera. The business friendly center-right politician – who takes power on March 11 after governing the country in 2010-14 – has promised a series of projects to be executed under the concessions model with investments of around US$14bn in his 2018-22 term.
Addonizio adds that the Chinese investments will continue well past Piñera's second term.
"This is a long-term strategy to enter the Latin American market, given the strength of Chile's concessions program, and also its recent reforms," he stated, citing the recently approved US$9bn infrastructure fund and the newly created concessions agency.
EUROPEAN FIRMS TO FEEL THE PRESSURE
Chile's concessions market is dominated by European firms such as Sacyr, Acciona, Abertis and Atlantia (part of the Grupo Costanera). "European firms will feel pressured as Chinese firms continue to increase their presence. But by no means do we expect China to become the dominant player. European firms will remain very active," Addonizio said.
China's forays into Chile are also a reflection of its wider plans for the region. "We're seeing Chinese firms growing increasingly active across Latin America," the analyst said, citing the interest of China Tiesiju Civil Engineering Group (CTCE) in carrying out pre-feasibility studies for a light rail in Panama.
Colombia could also provide opportunities for Chinese companies, although most of the contracts associated with the country's main infrastructure program, the 4G highways, have been awarded already. "There aren't a lot of opportunities there, but there are in pipelines and railways, as well as in Bogotá's Metro and Regiotram," Addonizio said.