Following our previously published Client Alert titled, “Colombia Relaunches Bid Process for Pacific LNG Import Terminal and Associated Transport Infrastructure,” (“Previous Client Alert”) on October 29, 2020, the Mining and Energy Planning Agency (UPME) released the final version of the tender documents for the USD 700 million LNG regasification facility and related pipeline project, commonly known as Pacific LNG (“the Project”). The revised and final version of the tender documents includes a new timeline for the development of the Project, but did not provide greater clarity on some of the more sensitive issues related to this strategic Project for Colombia.
Under the final version of the tender documents[1] UPME pushed back the deadline to submit bids by two months and the deadline to complete the Project by more than two years. The most notable milestones now being as follows:
- Deadline to submit bids: April 27, 2021;
- Project award: May 18, 2021;
- Deadline to submit counteroffers (only if there is one bidder): May 27, 2021
- Project award if there is a counteroffer: June 18, 2021; and
- Project commercial operation date: 58 months after the Project award (that is, March or April 2026). The tender documents now provide for an optional early COD to be achieved on or before December 2024.
Although the final version of the tender documents included several changes to the previous version of the tender documents, the overall structure of the tender and the Project remains largely unchanged. In this regard, in addition to the revised timeline discussed above, the most significant change was that the time period during which the winning bidder will be entitled to receive the “annual expected remuneration” (or IAE) was reduced from 20 years to 15 years. All of the other main features of the Project that we discussed in our Previous Client Alert remain unchanged.
Similarly, the challenges that we noted in our Previous Client Alert (such as the Challenges of the Source of Payment, the determination of the IAE, the 42% cap for the USD Tranche, and the assignment restrictions) were not clarified or mitigated in the final tender documents.
Undoubtedly, the revised timeline for the development of this Project is more realistic, but it still remains to be seen how and when some of the most fundamental features of this Project (such as the identity of, and mechanics related to, the beneficiaries or demanda beneficiada) will be clarified. We will continue to monitor the additional regulation that may be enacted for this Project and the measures (if any) that may be announced to, hopefully, mitigate certain construction-related risks (e.g., permitting, easements) and the risks related to the counterparties responsible for the IAE payments, to help ensure that this Project benefits from cost-efficient bids and a successful financing.
Footnotes
[View source.]
