Freight rail projects in Colombia: Here are the risk allocation principles
In recent years rail projects in Colombia have received a boost, in an attempt to reduce costs and times in logistics chains, among other benefits brought by a reactivation of the sector. This led to new legislation on a range of topics. In this article we describe the characteristics of the contractual risk policy for freight rail projects and their distribution. We also provide an overview of the rail projects currently in progress.
The 2020 CONPES 3982 document containing the National Logistics Policy in Colombia recommended the drawing up of a reactivation and promotion policy for rail transport. The response came in November 2020 when the Rail Master Plan was issued setting out the priorities for boosting rail transport in the country in institutional, legislative, regulatory and funding terms. The main benefits sought by implementing this plan include a reduction of costs and times in logistics chains, the attraction of foreign investment and an increase in the country's competitiveness.
In line with this, in September 2021 the CONPES 4047 document was issued, which adopts the characteristics of the government’s contractual risk policy for freight rail systems with private investment in the country. This policy was issued to create a set of rules on risks for the structuring and development of rail projects with private investment, bearing in mind that a few rail projects involving freight transport are currently in a structuring process.
This document sets out the risk allocation principles associated with railway projects in accordance with the provisions of the CONPES document.