Official calls for US participation in infra. projects

US companies should participate in Chilean infrastructure projects that over the next 1.5 years are together worth US$1.5bn, Chile's undersecretary for public works (MOP), Clemente Pérez said. No US construction companies are involved in Chile's concession projects despite safe measures to guarantee investment, Pérez said during the Latin American Leadership Forum in Washington DC. PROJECT GUARANTEES Chile's government uses two mechanisms to reduce risk in private infrastructure. The first involves a long-term minimum income investment guarantee, where the government pays investors the difference if revenues fall behind a pre-established minimum because "the project is not performing as we had predicted," he said. But of the 40-plus concession projects going on in the country, "only one or two" have had to make use of this guarantee, Pérez added. The second mechanism is to guarantee the foreign exchange rate to safeguard private investment from exchange rate fluctuations. INVESTMENT ENVIRONMENT Pérez pointed to free trade agreements signed with the US, European Union and South Korea, plus Chile's average 6% GDP growth over the last 20 years as signs of an open, solid economy. Further, credit rating agencies have assigned high risk ratings for the country, while the government's 1% public budget surplus rule shows the country is stable and attractive to private investors. The infrastructure sector has received US$6bn investment over the last 10 years, he added, which was mostly funded by highly subscribed bonds issued on the national market. "For example, last year US$400mn in roads bonds were sold in 40 seconds and were three times oversubscribed," he said. US companies responded positively to the investment guarantee during the conference, with companies such as California-based Fluor (NYSE: FLR) promising to take a closer look at the infrastructure concessions market in Chile.