MercoPress. South Atlantic News Agency

Latam needs to invest 2 trillion dollars in infrastructure in next 20 years

Hamilton Moss, CAF Vice-president: “knocking doors of multilateral banks for funds won’t be enough”

Latin America will need 2 trillion dollars investment in the energy sector during the coming twenty years to sustain its development growth, according to a conference on “Energy: a vision of the challenges and opportunities in Latin-American and the Caribbean” sponsored by Latam Development Bank, CAF.

 “In the coming twenty years we will be needing anywhere from one to two trillion dollars for the energy sector financed with international funds”, said Hamilton Moss, CAF Vice-president during the conference held in Montevideo.

CAF has financed the report on energy, challenges and opportunities together with the Latin-American Integration Association, ALADI; the UN Economic Commission for Latam and the Caribbean; Organization of American States and the Latam Energy Organization, OLADE.

Also contributing to the report and the Montevideo conference were the Regional Association of Companies from the oil, gas and bio-fuels industry of Latin America, ARPEL; the Regional Energy Integration Commission, CIER and the Energy World Council.

Moss anticipated that to have access to those funds “it will not be enough' to go knocking on the doors of the multilateral banks which exist, and thus it will be important a close collaboration of governments with the private sector.

”This report is a synthesis paper but I call on those responsible and States to work closely and advance the report to a second stage so that we can have access to sufficient funds to build the necessary infrastructure for Latin America“ pointed out Moss.

ARPEL director of Strategic Issues, Amanda Pereira recalled that the region has the world's second oil and gas reserves, ”but that needs significant investments for its development“.

She advanced a figure, ”investment from 2010 to 2015 in Latam should be in the range of 77 billion dollars per year”. Ms Pereira underlined that according to the paper, in 2011 an estimated 6% of the region's population, 30 million has no access to electricity of which 20 million were poor.

The CAF paper also showed that Latin America invested 440bn dollars in infrastructure projects between 2008-11, with the bulk of proceeds going to transport initiatives.

However, when measured as a ratio of the region's GDP, infrastructure investments remain close to 3%, three times less than in China -the world's second largest economy- and two times less than in India, one of the fastest growing economies in the world, the bank said.

In the region as a ratio of GDP Ecuador led infrastructure investment with close to 6%, followed by Bolivia and Peru, 4%. Brazil and Mexico, the two main economies in the region, average close to 3%.

The paper says that 48% of the funds went to transport projects, such as highways, roads and bridges where Brazil, Colombia, and Peru are investing heavily.

Another 25% of the proceeds went to energy projects, but the situation is not encouraging with frequent blackouts in Venezuela and Argentina, and even in market-friendly countries such as Chile some projects have been canceled or delayed because of environmental protests.

The Telecommunications sector got 20% of the funds, while the water industry received close to 7% of overall infrastructure investments.