For a review of the main types of critical issues identified within the Group’s operations in Venezuela, refer to the information provided later in this section under the heading “Segment’s risk areas”.
Puerto Cabello Railway – La Encrucijada
The work consists in building the civil engineering works of a railway stretch of about 110 km, connecting Puerto Cabello to La Encrucijada.
In June 2014, Salini Impregilo signed a new contract addendum with the Railway Institute for electromechnical works on the Puerto Cabello-La Encrucijada line. The value of the work included in the addendum, taking into account the new changes adopted by the Group, mentioned in the first part of this report, is roughly € 350 million. The percentage of work completion as of September 30, 2014 was 69.5%.
San Juan de los Morros-San Fernando de Apure Railway and Chaguaramas-Cabruta Railway
Impregilo, with a 33.33% share, is involved in the construction of two additional railway lines, “San Juan de los Morros-San Fernando de Apure” (252 km) and “Chaguaramas-Las Mercedes-Cabruta” (201 km).
In addition to the 453 km of new lines, the projects include rail design and installation and construction of 11 stations and 9 logistics centers.
Work was 45.2% complete for the “San Juan de los Morros - San Fernando de Apure” section at September 30, 2014.
59.8% of the “Chaguaramas - Cabruta” section has been completed as of September 30, 2014.
Expansion of the Panama Canal
In July 2009, Impregilo, through Grupo Unidos por el Canal Consortium – a consortium with members Sacyr Vallehermoso (Spain), Jan de Nul (Belgium), and the Panamanian company Constructora Urbana (Cusa) – received official notification of the competitive bidding award to build a new system of locks as part of the Panama Canal expansion project. The bid came to $3.22 billion.
The project, referred to as Post Panamax, is one of the largest civil engineering projects ever undertaken, calling for the construction of two new sets of locks, one on the Atlantic side and one on the Pacific side. It will allow commercial traffic through the canal to increase and meet growth in the maritime transport market, characterized by a trend toward the construction of larger and heavier vessels than those which can currently pass through the existing locks.
For a review of the main types of critical issues identified for this project, refer to the information provided later in this section under the heading “Segment’s risk areas”.
The percentage of work completion as of September 30, 2014, was 86.4%.
Colombia – Hydroelectric project on the Sogamoso River
In December 2009, Impregilo won the competitive bidding to build the hydroelectric project on the Sogamoso River in northwestern Colombia, about 40 km from the city of Bucaramanga.
The project involves the construction of a dam measuring 190 m high and 300 m long, and an underground power plant which will house three turbines totaling 820 MW of installed power. The value of the project is currently about € 590 million and the client is ISAGEN SA, a mixed public/private funding concessionaire involved in electrical power generation in Colombia.
Furthermore, Impregilo has already completed the preliminary work on the dam, involving the construction of two diversion tunnels measuring about 870 m long and 11 m in diameter, and a system of plant access roads and tunnels.
As for the main project of dam construction, critical issues were already encountered during the second half of fiscal year 2011, with a negative impact on both the production level and profitability. In particular, these events included exceptional adverse weather which struck a significant portion of the Colombian territory, substantially delaying the river diversion work, and, at the same time, the presence of geological conditions differing substantially from the contractually specified conditions, not to mention changes in the scope of work requested by the client. In the early part of 2012, some of the most substantial claims submitted by the contractor were acknowledged, and in 2013 a new contract change was obtained for the construction of new accessory works in the basin affected by the dam. The additional reservations submitted to the client are still under discussion.
The percentage of work completion as of September 30, 2014, was 99.8%.
Colombia – “Ruta del Sol” Highway Project
At the end of July 2010, the Impregilo Group won the competitive bidding to manage the concession of the third highway lot of the “Ruta del Sol” project in Colombia. The concession, awarded to a grouping of companies led by Impregilo and consisting of the Colombian companies Infracon, Grodco, and Tecnica Vial, and the private investment fund RDS (owned by Bancolombia and the Protección Pension Fund), calls for the adaptation, widening to four lanes, and management of two highway stretches between the cities of San Roque and Ye de Cienaga, and between the cities of Carmen de Bolivar and Valledupar. The overall amount of the investment is about $1.3 billion. The concession contract provides for a total revenue of about $3.7 billion (40% for Impregilo’s share), including income from tolls and a public contribution of $1.7 billion, which will be paid out starting with the construction phase. The concession will run for 25 years, including 6 years for the infrastructure design and adaptation phase and 19 years for the management phase.
The percentage of work completion as of September 30, 2014, was 18.3%.
Chile – Angostura Hydroelectric Project
At the end of June 2010, Impregilo won the competitive bidding launched by the client Colbun SA, a Chilean company involved in electrical power generation, to build a hydroelectric project in Chile, with an overall value currently standing at approximately € 250 million.
The plant is located in the Angostura area about 600 km south of the capital Santiago.
In particular, the project involved the construction of a main dam measuring 152 meters long and 63 meters high, a secondary dam measuring 1.6 km long and 25 meters high, and the underground power plant which houses three generators for 316 MW of installed power. The electrical power output is about 1540 GWh per year.
Starting with the second half of fiscal year 2011, the project started to run into some critical issues due to growing socio-economic problems differing substantially from the projections shared during the bidding phase, and site working conditions resulting in part from changes in the work required by the client. The litigation actions taken against the client, some of which are still pending, have allowed for a partial containment of the effects that these critical issues have had on the profitability of the project. As of the reference data of this Interim financial report, the project’s profitability was still in the red, and fully reflected in the balance sheet values already posted for previous fiscal years.
The construction work are completed.
Argentina - Riachuelo
On July 15, 2013, Impregilo, in partnership with its US subsidiary Healy S.A., won the competitive bidding for a lot to build a new wastewater collection system in the capital of the country, as part of the environmental remediation program of the metropolitan region of Buenos Aires Province. The value of the project, led by AySA (Agua y Sanamientos Argentinos SA), one of the major players in the Argentine water sector, is approximately € 360 million.
The project involves the collection of wastewater from the Riachuelo treatment plant by means of a pit about 40 m deep. The wastewater will then be conveyed through a tunnel measuring 11 km long and 3.8 m in diameter to an outlet that will be built on the bed of Rio de la Plata.
The initiative has a strong social and environmental value. It is the first part of a broader program funded by the World Bank for sustainable development of the Matanza-Riachuelo Basin, aimed at cleaning up the Riachuelo River and the regions it passes through, which are considered to be among the most polluted in the world.