CAF Aims To Be Strategic Partner On TransPacific Cable

By Valentina Osorio
April 26, 2021

After participating in supporting the pre-feasibility phase, the multilateral organization seeks to be part of the financing of this project for US $388 million. And it also points to initiatives in renewable energy.

Investment in infrastructure plays a key role in reactivating economies affected by the pandemic. With this vision, the Development Bank of Latin America – a multilateral financial institution that groups together 19 countries, 17 from Latin America, Spain and Portugal – is strengthening its actions in the region in this area.

In effect, the entity – which uses the acronym CAF by its old name Corporation de Fomento Andino – has funds for US $30 billion to invest in the region, of which about 60% are destined to infrastructure.

The vice president of infrastructure of the Development Bank of Latin America, Antonio Silveira, assures that the objective of the organization for 2021 is “to maintain the position of main financier of infrastructure and to leverage the development of the countries.”

In Chile, they financed the pre-feasibility study of the submarine fiber optic cable that will link the country with Asia Pacific, an initiative p[romoted by Country Development (former Infrastructure Fund), with a construction cost estimated to range between US $388 million and the US $ 450 million.

In the pre-feasibility analysis phase – to which the agency allocated resources for US $3 million – it was determined that the most profitable route was the one between the cities of Valparaiso, and Sydney, Australia, which an extension of 13 thousand kilometers.

Once this stage has been completed, CAF is now interested in taking its participation in this project to the next level and becoming a strategic partner of it. “We would like to have space there, because it is a very good integration project, and since we were involved in the pre-feasibility I think it would be an excellent opportunity to also be in the financing,” says Silveira.

So far, County Development has yet to define who could advise them financially, a process that has generated the interest of entities such as Natixis, Bank of America, BNP Paribas, and Lazard. After completing this stage, they will go out in search of strategic partners for financing.

In addition, CAF is looking at financial support options for renewable energy projects, especially wind and solar initiatives. And while appreciating the significant development of this area in recent years, the executive acknowledges that, unlike other nations, Child “does not like multilateral financing very much, it is doing very well with the market; so they don't need us of the IDB, or the World Bank.”

In this sense, the lever of organization of our country in terms of infrastructure investment and access to markets stands out, for which “the participation of multilaterals in project financing is almost marginal in relation to private funds,”

In other countries, the entity works on projects such as highway construction, digital infrastructure and works in the electricity sector.