Central America Infrastructure Report Q2 2012

Business Monitor International
March 13, 2012
69 Pages - SKU: BMI3809414
Countries covered: Central America

BMI View: The Central America region is a mixed bag; whilst opportunities are on offer across the region, the risks in some countries are prohibitive.

Escalating violence and exposure to international instability makes the region a risky bet, particularly considering the small scale of industries.

However, we do expect some sectors to provide attractive opportunities.

The Panama Canal in itself is creating a dynamic industry in Panama, with the country set to outperform in terms of industry growth, in addition to investing in ports and airports across the region.

The power sector is the other major growth area, with renewable investors likely to find fertile ground in the region.

Key Regional Themes: Power: New electricity generating capacity is receiving sizeable investment in Central America.

Hydropower is the dominant source of electricity and will remain so, given the number of projects being developed across the region.

Key hydropower projects include: the US$300mn Patuca III in Honduras, the US$700mn Tumarin project in Nicaragua, the Tres Ninas project in Guatemala, the 138MW Paz hydropower project in El Salvador and the 223MW Changuinola in Panama.

In addition, the Central American Electrical Interconnection System (SIEPAC) is due to be completed in March 2012.

.. Renewables: Both wind and geothermal potential in the region are attracting investor, given the untapped potential for both and the hope of reducing reliance on imported fuels.

The completion of Gamesa and Iberdrola’s 100MW Cerro de Hula Wind Farm in Honduras is the first of many projects planned in the region.

El Salvador is hoping to start its first commercial wind farm in 2016/17 and Acciona is building a 49MW project in Costa Rica.

Geothermal potential is also being explored, Panama has called for companies to register interest in geothermal concessions and Ram Power has completed the first phase of expansion of its San Jacinto-Tizate geothermal plant.

In February 2012, Ram Power released a statement saying that phase II of the plant is ‘approximately 60% completed, with final completion expected in December 2012’.

.. Airports: Opportunities are anticipated in the region’s airport sector.

Honduras has announced a US$300mn plan to invest in five airports and El Salvador, Nicaragua and Panama all have projects underway or in the pipeline.

.. Ports: Port infrastructure appears to be a priority area of investment across the region.

The most important project is undoubtedly the expansion of the Panama Canal.

The US$5.2bn project, to be completed in 2014, will significantly alter the regional trade and shipping dynamics.

Other notable projects include the US$1bn Moin Container Terminal in Costa Rica, to be built and operated by APM Terminals, and the US$500mn plan for a port at Monkey Point in Nicaragua, for which Andrade Gutierrez was contracted for a feasibility study in August 2011.

Despite a number of opportunities across a variety of sectors, there are pertinent risks to investment.

The biggest is the growing threat of violence from drug cartels.

This has impacted Honduras, Guatemala and El Salvador the most, with no sign of easing over the near-term.

.. Whilst Guatemala saw some improvements over 2011, with Molina taking office in January 2012 we could create a short-term spike in risk as he vows to wage war against the drug cartels.

Given that Guatemala is trying to develop its PPP sector, this is bad news for the business environment.

.. Finally, we highlight concerns over vulnerability to international instability.

The region is highly reliant on export revenues, especially from agri -products, and therefore any economic slowdown prompted by Europe or China could impact government revenues.

At the same time, the region is exposed to fluctuations in commodity prices, raising inflation concerns.

The region is highly exposed to energy and industrial metals prices, which could raise the cost of construction materials and stoke inflation concerns.



More Heavy Construction reports by Business Monitor International

Zimbabwe Infrastructure Report - Q4 2014 by Business Monitor International
Zimbabwe Infrastructure Report - Q4 2014Zimbabwe's construction sector is impeded by political uncertainty that continues to dissuade investors.Despite vast resources, the country's construction industry remains ...
South Korea Infrastructure Report - Q4 2014 by Business Monitor International
South Korea Infrastructure Report - Q4 2014BMI View: We see no reason to deviate from our expectations of a continuing slowdown in South Korea'sconstruction sector. ...
Singapore Infrastructure Report - Q4 2014 by Business Monitor International
Singapore Infrastructure Report - Q4 2014BMI View: We continue to expect construction and infrastructure growth in Singapore to moderate overthe 2014-2020 period. Real growth for ...
Poland Infrastructure Report - Q4 2014 by Business Monitor International
Poland Infrastructure Report - Q4 2014BMI View: Our optimism towards Poland's construction sector in 2014, following a steep 9% contractionin 2013, is being rewarded. Growth, ...
See all reports like this >>

More Central America Heavy Construction reports

Infrastructure Report - Central America Q3 2014 by Business Monitor International
Central America Infrastructure Report Q3 2014BMI View: There is a wide divergence of performance and opportunities across the various construction industry markets in Central America. ...
Central America Infrastructure Report Q2 2014 by Business Monitor International
Central America Infrastructure Report Q2 2014BMI View: We see high risks, small scale and limited growth opportunities across the region as a whole. Acrucial factor ...
Central America Infrastructure Report Q1 2013 by Business Monitor International
BMI View: Opportunities are available across the Central America region; however, the fragmentednature of the region and the high risks inherent in some markets make ...
Central America Infrastructure Report Q4 2012 by Business Monitor International
BMI Industry ViewBMI View: The Central America region offers a plethora of investment opportunities in theinfrastructure sector and is on track to post some of ...
See all reports like this >>

More Central America reports

D&B Country Report: Guatemala by Dun & Bradstreet Inc.
D&B Country Report. Comprehensive information for evaluating risks and opportunities when trading or investing in this country. Providing critical information and analysis on ...
D&B Country RiskLine Report: Panama by Dun & Bradstreet Inc.
This D&B Country RiskLine Report will help you analyze the risks, opportunities and likely payment delays when doing business in this country. It includes ...
D&B Country RiskLine Report: Nicaragua by Dun & Bradstreet Inc.
This D&B Country RiskLine Report will help you analyze the risks, opportunities and likely payment delays when doing business in this country. It includes ...
D&B Country RiskLine Report: Guatemala by Dun & Bradstreet Inc.
This D&B Country RiskLine Report will help you analyze the risks, opportunities and likely payment delays when doing business in this country. It includes ...
See all reports like this >>

 

SELECT A LICENSE

    Report with 3 quarterly updates  USD 1,175  
 
US: 800.298.5699
Int'l: +1.240.747.3093
 

Share this report


    Other tasks

     
     
    Join Alert Me now!
    Receive bi-weekly email alerts on new market research

    Sign up today!