CHILE: Infrastructure, The Challenges Ahead

CHILE: Infrastructure, The Challenges Ahead Hernán de Solminihac Vice President CPI - Chile Former Minister of Public Works and Minister of Minning Professor Civil Engineering and Planning Director of Clapes - Universidad Católica de Chile May 2017 Latin American Infrastructure Forum 2017 Melbourne - Australia

1. Council Infrastructure Policies (CPI) 2. Chile is a Country Open to the International Market 3. Infrastructure Background 4. Public Infrastructure Under Concession 5. Policy Changes 6. Project Portfolio 7. Final Comments Topics

1. Council Infrastructure Policies (CPI) a. The Council Infrastructure Policies (CPI) was born in January 2013. b. It formulates proposals, identifies priorities, and monitors progress of government infrastructure policies. c. It consists of 30 people: 3 former presidents of the country, 7 former public works ministers, 3 former housing ministers, 2 former ministers of the economic area, among others. d. A private non-profit corporation (NGO) was created and among its partners there are 4 recognized universities that contribute with their technical solvency and 8 business guilds.

1. Council Infrastructure Policies (CPI)

2. Chile is a Country Open to the International Market a. Stable economy, with institutions that have created a friendly framework for foreign investment. b. Reliable Country with A+ risk rating according to Fitch Ratings and AA- according to Standard & Poor's c. Competitive Country ranked 33rd in the world ranking of competitiveness according to WEF d. Average GDP growth of 3.9% between 2005 and 2015 e. A gross domestic product (GDP) of around 500,000 million dollars (US$24.000 per capita), and is considered among the ten most open economies in the world. f. In the past 12 years, it has received $ 200 billion of foreign direct investment, equivalent to just under 50% of its GDP

2. Chile is Member of the OECD OECD Organisation for Economic Cooperation and Development GDP USD 46.67 trillion Total population 1070 million GDP per capita weighted average USD 44,290 70% of the world market

3. Infrastructure Background Since the late 1980 s, Chile has made a major investment effort in infrastructure. Central Government Investment (billions of 1998 pesos) Source: Mideplan 1999

3. Infrastructure Background This effort result: a. Mckinsey: Chile improves its competitive position (WEF ranked 22nd in 2005) b. High coverage of potable water and sewage treatment (3rd worldwide) c. Ports with high productivity ratings d. Airports of the World award e. 2500 km of high standard roads f. Network of secondary roads (with public resources).

3. Infrastructure Background This effort result: g. Urban highways (150 km in Santiago) h. First program in the world of urban freeways with multi operator free flow (TAG) system i. Exclusive lanes for public transport j. Concession of prison facilities k. Santiago Metro network extended by a factor of 3 (public resources).

3. Infrastructure Background - Investment peak on 2004 Investment in public infrastructure concessions 1994-2015 (Millions of US dollars)

*http://www3.weforum.org/docs/gcr2016-2017/05fullreport/theglobalcompetitivenessreport2016-2017_final.pdf 3. Infrastructure Background Although Chile maintains its leadership in the region, it has fallen in some of the competitiveness indices between 2005 and 2017: i. Decreased competitiveness from place 22 to 33* ii. Infrastructure (overall) from place 28 to 44* iii. Quality Roads from 12 to 30* Ranking of Global Competitiveness, Chile and Countries of the Region Source: World Economic Forum and UAI

4. Infrastructure Under Concession In the 23 years through December 2016, 86 contracts had been awarded: Roads 12 long-distance Highways 16 intercity highways 9 urban highways There is a total of 3575 km. built, 1991 km. of the longitunal highway Airports 11 airports, from a total of 13 regional and international airports, including the new international terminal AMB, with capacity for 30 million pax. Public buildings Santiago Justice Center, Los Andes Land Terminal, Roofed Stadium, Metropolitan Vehicle Removal Center, La Moneda Cultural Center Plaza de la Ciudadanía, Los Libertadores International Border Complex.

4. Infrastructure Under Concession 8 Prisons Capacity for 16,874 inmates, housing 31% of the criminal population. 5 Hospitals High complexity hospitals: 2 operational, 3 under construction with a total of 2,601 beds Public Transport Modal Exchange Station, exclusive public transport routes Water reservoirs Two reservoirs including La Punilla reservoir for dual use: irrigation and power generation.

4. Infrastructure Under Concession Market share according to the country of origin of the concessionaire (2016) 5% Others 4% France 11% Italy 34% Spain 11% Chile 16% Colombia 19% Canada

5. Policy Changes a. During the previous administration (2010-2014), the problems were recognized, a new infrastructure policy was developed and decisions were adopted to correct the situation. b. These initiatives were continued and strengthened by the current government, so we can be optimistic about the future of infrastructure development in Chile. c. The Council of Infrastructure Policies (CPI) has supported these efforts with enthusiasm. d. At the end of this year, Chile has presidential elections and candidates are putting emphasis in infrastructure

5. Policy Changes We have the opportunity to install an investment policy that could have transformative effects in the country: a. Concessions program 2016 2021 i. Infrastructure for public transport ii. iii. Infrastructure for private transport in cities International border crossing iv. Santiago Metro (Line 7) b. Large Scale Port i. Its location should be decided in the coming months c. Railways i. The national railway company (EFE) will present the government the option of investment under concessions.

6. Project Portfolio The portfolio will have 4 development axes, and identifies projects totalling USD 9,4 billion, covering all regions of the country.(**) Longitudinal Connectivity Development of Transversal Routes and Works of Logistic, Productive and Tourist Potential Regional Airport Connectivity Development of Urban Transport Infrastructure and Public Spaces By 2030 the main longitudinal highway (Route 5) should be completed from Arica to Quellón (Chiloe). Develop transversal, productive routes and support infrastructure to improve competitiveness. Includes a multipurpose and irrigation dams program. Incorporate the whole of the primary airport network into the higher concessional standard and integrates secondary airfields to improve their operational capacity. Development of highstandard urban infrastructure and urban public transport systems, based on concessions. USD 2.6 billion USD 3.8 billion USD 380 millions USD 2.6 billion **Presentation of the Ministry of Public Works before the Chilean Senate October 2016

6. Project Portfolio Summary table of projects 2016-2021 Types of Projects Amount MMUSD % Subsidy Amount MMUDS Interurban routes 5430 15% 793 Urban highways 2345 27% 622 Airports and aerodromes 380 0% 0 Cable car 80 0% 0 Public transport 50 0% 0 Total Portfolio 2016-2021 8.285 17% 1415 **Presentation of the Ministry of Public Works before the Chilean Senate October 2016

6. Project Portfolio March 2016 through March 2017 Subsidy Other conditions Project Identification (**) Amount MMUSD % Amount MMUSD Call for tender Receiving Offers Current Current Concession contract term Route: Nogales Puchuncaví 213 0% 0 27-nov-15 Adjudicated Yes Aug 2046 Airport: Carriel Sur 31 0% 0 14-dic-15 Adjudicated Yes Aug - 2031 Airport: Diego Aracena (Iquique) 69 0% 0 23-mar-16 Q1 2017 Yes dic- 2016 Highway: Américo Vespucio Oriente II 786 15% 120 12-aug-16 Q1 2017 Route: Nahuelbuta (*) 245 43% 104 Q4 2016 Q1 2017 Total 1.344 21% 224 **Presentation of the Ministry of Public Works before the Chilean Senate October 2016 (*) Private initiative Highway: Vespucio Oriente Route: Nogales Puchuncaví

6. Project Portfolio March 2017 through March 2018 Subsidy Other Conditions Project Identification (**) Amount MMUSD % Amount MMUSD Call for Tender Receiving Offers Current Concession Current contract term Loa Route (*) 200 0% 0 Q4 2016 Q2 2017 Yes apr-18 Route G-66: Camino de la Fruta 599 60% 360 Q1 2017 Q3 2017 Improvement of route G-21 (*) 92 0% 0 Q1 2017 Q3 2017 Bicentenario Cable car (*) 80 0% 0 Q1 2017 Q3 2017 Route 5: Los Vilos -La Serena+Urban 328 0% 0 Q2 2017 Q4 2017 Yes jun-22 Airport El Tepual + Chiloé 60 0% 0 Q2 2017 Q3 2017 Highway: Puerto Montt Metropolitan(*) 321 30% 102 Q2 2017 Q4 2017 Connection R68 R78 (*) 250 0% 0 Q3 2017 Q1 2018 Total 1930 23% 462 **Presentation of the Ministry of Public Works before the Chilean Senate October 2016 (*) Private initiative Higway: Metrop. de Puerto Montt Route G-66 Bicentenario Cable car

6. Project Portfolio March 2018 through March 2019 Project Identification (**) Amount MMUSD % Subsidy Amount MMUSD Call for tender Receiving Offers Highway: Costanera Central T1 (*) 1116 36% 400 Q3 2017 Q2 2018 Route: Longitudinal Chiloé (*) 250 0% 0 Q3 2017 Q2 2018 Airport: Balmaceda 30 0% 0 Q3 2017 Q3 2018 Route 5: Temuco - Rio Bueno + Valdivia access(*) Other Conditions Current Concession Current contract term 250 0% 0 Q4 2017 Q4 2018 Yes jun-23 Airport: Chacalluta 30 0% 0 Q1 2018 Q4 2018 Yes apr-19 Route 5: Caldera Antofagasta (*) 640 30% 192 Q2 2018 Q1 2019 New Airport: IV Region 100 0% 0 Q2 2018 Q1 2019 Yes dic-22 Total 2416 25% 592 **Presentation of the Ministry of Public Works before the Chilean Senate October 2016 (*) Private initiative Highway: Costanera Central T1 Airport: Chacalluta Route: Longitudinal Chiloé

6. Project Portfolio March 2019 through March 2020 Project Identification (**) Exclusive transport route: Santa Rosa Amount MMUSD % Subsidy Aumont MMUDS Call for tender Receiving Offers Other Conditions Current Concession Current contract term 50 0% 0 Q4 2018 Q2 2019 Yes apr-20 Route 5: Talca Chillán 225 0% 0 Q4 2018 Q3 2019 Yes mar-20 Route 5: Chillán Collipulli 225 0% 0 Q1 2019 Q3 2019 Yes jun-20 Route 68 + Alternatives 600 0% 0 Q1 2019 Q4 2019 Yes 2021-23 South Orbital Santiago * 92 0% 0 Q3 2019 Q1 2020 Route: Freire, Villarrica, Pucón 330 0% 0 Q4 2019 Q1 2020 Total 1.522 0% 0 **Presentation of the Ministry of Public Works before the Chilean Senate October 2016 (*) Private initiative Exclusive transport route: Santa Rosa Route 5 South Route 68 Alternatives

6. Project Portfolio March 2020 through March 2021. Subsidy Other Conditions Project Identification (**) Amount MMUSD % Amount MMUSD Call for tender Receiving Offers Current Concession Current contract term Route connexion: Suiza - Las Rejas 30 0% 0 Q4 2019 Q2 2020 Yes jun-21 Route 5: Santiago - Los Vilos 225 0% 0 Q4 2019 Q3 2020 Yes feb-21 Route 78: Santiago - San Antonio 300 0% 0 Q1 2020 Q3 2020 Yes mar-21 Route 5: Antofagasta Iquique (*) 458 0 137 Q1 2020 Q4 2020 Airports: Carlos Ibáñez y Puerto Natales 60 0% 0 Q2 2020 Q1 2021 Yes jan-25 Total 1.073 13% 137 Total Portfolio 2016-2021 8.285 17% 1415 (*) Private initiative **Presentation of the Ministry of Public Works before the Chilean Senate October 2016 Airport: Carlos Ibáñez Airpot: Puerto Natales Route connexion: Suiza - Las Rejas

6. Project Portfolio Region N of Works Investment in MMUS (**) I 5 8 II 1 2 III 4 136 IV 8 12 V 8 69 V - RM 4 166 RM 270 892 VI 78 79 VI - VII 12 6 VII 104 54 VIII 249 195 VIII - IX 3 4 IX 104 93 IX - XIV 1 0 XIV 50 38 XIV - X 7 7 X 85 67 Total 993 1.827 Road Improvement Program It includes additional investments in road works for MMUSD 1,444. Other improvements estimated at MMUSD 383. **Presentation of the Ministry of Public Works before the Chilean Senate October 2016

6. Project Portfolio projects under study Projects Under Study (**) Projects Under Study (**) Civic Center of the Region of Los Ríos(*) Route: Valdivia Access(*) Route Pie de Monte (*) Highway: Northwest Santiago Lampa (*) International Border Crossings Reservoir La Jaula Connectivity improvements: Coquimbo - La Serena Public Transport (*) Low-altitude Rail Tunnel y Central Transandean Railway Operation Cablecar Iquique Alto Hospicio (*) Route: Villarrica (*) Cablecar Valparaíso Exclusive transport route: Independencia (Santiago) Road Interconnection: Copielemu Hualqui Puerto Coronel (*) International Land Port of the Region of Antofagasta (*) Tower Antenas Cumbre Santiago Project South Orbital Road Santiago (*) **Presentation of the Ministry of Public Works before the Chilean Senate October 2016 New Centrality Arica (*) (*) Private initiative Civic center Cablecar Iquique Border Crossings

7. Final Comments Chile is a country open to the international market With a quarter of a century experience in concessions We have a project portfolio of more than 8,2 billion dollars by 2021 Chile is a great country to invest in infrastructure