Understanding Chinese investments in Colombia

a-Contenido informativo propioUnderstanding Chinese investments in Colombia

Diálogo Chino

A year ago, communities from 32 precincts in the department of Caquetá, Colombia, began a campaign of organised resistance against encroaching oil companies.  The campaign kicked off through the Life of Water and Departmental Table for the Defence of Water commissions following the government’s award of the Nogal block to Emerald Energy PLC, property of China’s state-owned Sinochem.

According to the contract, the company will explore an area of 239,415 hectares in the municipalities of Albania, Belén de los Andaquíes, el Paujil, Florencia, Milán, Montañita, Morelia and Valparaíso, with the aim of exploiting oil for the next 30 years.

Owing to some bad experiences in the north of Caquetá, communities are especially concerned about the impacts of Emerald’s process of hydrocarbon production could have on water in the area. For this reason, communities in the south do not want the company to remain in its territory.

Emerald currently has eight awarded blocks in Colombia, six of which are in the Amazon region, in Caquetá and Putumayo. The company’s operations have caused huge social and environmental impacts resulting from the failure to comply with environmental legislation and conflict with rural and indigenous communities.

The case of Emerald is emblematic of Chinese energy and infrastructure projects in Colombia, which are presented in the report Chinese Investments in Colombia: How Are Projects with Chinese Participation Advancing in the Country?  Published recently by the NGO Asociación Ambiente y Sociedad (Environment and Society Association).

In spite of the fact that Chinese finance in Colombia is distinct from the broader regional pattern – Chinese lenders have still not made notable direct investments in the country – the existingcooperation framework shows the Asian powerhouse’s growing interest in our country. This interest is reflected in the ongoing involvement of Chinese companies in public tendering processes, and the various energy and infrastructure projects they have completed or are currently working on.

The report describes some of these projects and emphasises the nature of Chinese participation in Colombia and the companies involved. By doing this, we aim to provide people with clear information on where Chinese capital is flowing into the country, and which sectors it is prioritising.

Apart from Emerald Energy, and the handful of other Chinese companies involved in the oil sector in Colombia, the report looks at the case of Termoeléctrica GECELCA 3. The project, developed by China United Engineering Corporation and Dongfang Turbine Co, has been delayed by over two years at a cost to the country of around US$600 million.

With regards to infrastructure, the report also looks at the Buenaventura industrial park and the Productive Farming and Road Project  in the Orinoquía and Altillanura regions. In the case of Buenaventura, the works seek to revitalise the port through an integrated model of industrial, commercial, logistical and social development by attracting public and private investment and improving the quality of services that can foreign trade. In the case of Orinoquía, the aim is to construct a road that will cross the region and enable agricultural products to get to port. Both projects will be financed by China Development Bank, although according to information provided by the Colombian government, neither has advanced.

The last project the report looks at is the Fourth Generation Mar 2 Highway, which is the first big infrastructure project concession awarded to a Chinese company in Colombia. The project will stretch over 245km and will include the construction of 27 tunnels and 22 bridges. China Harbour Engineering Company, which is part of China Communications Construction Company Limited (CCCC), will carry out the work which will connect the municipalities of Cañasgordas and el Tigre in Antioquía and open up a new pathway to the sea.