The Bahamas is edging towards opening up its telecommunications sector, with the government’s plans to sell off a controlling stake in state-owned Bahamas Telecommunications Company (BTC) having taken another step forward in late November.

Having announced in January that it was opening a tender to sell off a minimum 51% stake in BTC, in July the government invited interested parties to register their interest in the privatisation tender. Though it has not publicly announced a price on the controlling interest in BTC, analysts say the government would be looking at generating $200m or more from the sale.

Prime Minister Hubert Ingraham has said the government intends to use the funds from the sale to help pay off some of the state’s debts, which have become a more pressing issue as the global economic crisis has seen revenue fall.

Currently BTC serves 334,000 wireless, 132,000 fixed-line and 18,500 broadband subscribers, as well as having an extensive catalogue of roaming agreements with 190 other service providers to meet the needs of the millions of visitors who come to the Bahamas annually.

While only a small operator by global standards, BTC is a profitable one, though like many companies in the sector it has seen earnings fall as a result of the global recession. In 2008 BTC posted a net profit of $21.1m, just under half of its result from the preceding year, with two-thirds of its profits coming from cellular services.

One of the appealing aspects of the BTC sale is the firm’s monopoly on the telecommunications market, though this attraction will subsequently be diminished by the government’s plans to expand the domestic market by introducing competition. Indeed, BTC will only be given two years in which to enjoy its exclusive status before having to face competition from two new mobile phone network licences awarded to new players.

According to local media reports at the end of November, at least six potential bidders lodged expressions of interest, though the committee tasked with overseeing the privatisation process deemed that only four be invited to progress to the next phase of the sell-off.

As it stands, UK-based communications firm Vodafone and One Equity Partners (OEP), JPMorgan Chase’s private equity arm; Digicel Limited; Atlantic Tele-Network; and Trilogy International Partners are the four bidders still in the running to become the majority shareholder in BTC.

Initially, the government had said it wanted the privatisation completed by the end of 2009, though now it appears the sales process will continue well into the new year, given the need for due diligence to be completed before full bids can be submitted.

The current privatisation process is not the first time that the Bahamas has tried to sell off a stake of its state-owned phone company, with the most recent attempt being in 2003. The process was called off after none of the three bids received came close to the valuation placed on the stake put up for sale.

Another reason given for the failure was that the sale had not attracted a top-flight service provider as a credible bidder. At least this is not the case this time around, with Vodafone one of the world’s largest telecommunications companies and Atlantic Tele-Network, Digicel and Trilogy all active in the Caribbean region and beyond.

Another advantage is that the Bahamas is better prepared to deal with a private telecommunications market. As part of the process of opening up the sector, the government has constituted an independent body to oversee the industry. Under legislation that came into force in mid-September, the Utilities Regulation and Competition Authority (URCA) is charged with having regulatory responsibilities for telecommunications, internet services, radio and television broadcasting.

On November 19, while attending a meeting of the URCA’s board, the deputy prime minister and minister of foreign affairs, Brent Symonette, said the authority would work to ensure that consumer interests are safeguarded, and sustainable competition is encouraged and supported.

“I feel that the entire Bahamas will benefit from this new regulatory body that will oversee the electronic communications sector in our country,” he said.

Having attracted the interest of some major players, and having put in place a regulatory regime to oversee the sector, now all the Bahamas needs to do is seal the deal in order to ring in a new era for telecommunications.

Colombian state controlled energy company Ecopetrol S.A. has announced its investment plan for 2010, totalling $6.93 billion, an increase of 11% compared to 2009.

93% of the proposed investment will be concentrated in Colombia, with the remaining 7% earmarked for exploration and production projects in the U.S. Gulf Coast, Brazil & Peru.

Investments in exploration and production represent 65% of the total capital investment plan for 2010, of which 51% will be allocated to production.

“The 2010 investment plan represents another milestone in achieving the goals we have set for 2015. Significant progress has been made in exploration and production, delivering on the promise of value we made two years ago.” said Ecopetrol’s CEO Javier Gutierrez Pemberthy. ”Investments made in other segments of our business will begin to show additional results starting in 2010. We have managed to gain efficiency in the consolidation of our portfolio and the allocation of resources to more productive investments in order to reach our production goal of one million barrels”

Exploration & New Business

With $951 million investment in 2010, Ecopetrol (EC) plans to drill twenty exploratory wells, thirteen directly in Colombia & a further seven overseas with partner companies. Four wells will be drilled in the Gulf of Mexico, two in Brazil and one in Peru. 54% of the investment will take place in Colombia.

Ecopetrol intends to continue its activities in the blocks awarded by the National Hydrocarbon Agency during the various rounds that took place in 2008, and will prepare its participation for the 2010 Colombia Round.

New business will focus primarily on development of exploration projects in the U.S. Gulf Coast, as well as in Peru and Brazil, in partnership with other companies.

Production

Ecopetrol will invest US$3.558 billion in continuing to increase its direct production of crude oil & gas to an average of 556,000 boed in 2010. This production goal reflects an increase of 12% compared with 2009, in line with the company’s growth target; one million barrels of oil equivalent per day in 2015.

The highest percentage of investment will be allocated to the Llanos Orientales projects, specifically for development of heavy crude in the Castilla, Chichimene & Rubiales fields. A representative percentage will be invested in the development of mature fields such as La Cira-Infantas, Yarigui-Cantagallo & Casabe. US$400 million will be allocated to gas projects, of which 70% will be assigned to the Cusiana and Cupiagua plants.

Refining and petrochemical

Total investment in this segment is estimated to be US$1.294 billion, up 59% compared to 2009 & will mainly address the continued upgrading of existing refinery operations.

In 2010, Ecopetrol plans toinvest $679 million to be divided among upgrades, the industrial services master plan & the construction and start-up of a hydrotreatment plant in Barrancabermeja. A further $470 million has been earmarked for the Cartagena Refinery Master Plan, which should expand the plants production capacity to 140,000 barrels a day

Transport

A further $735 million investment has been set aside for transport & logistics upgrades, primarily to boost capacity at the Pozos-Galan system from 18 MBD to 60 MBD & alos to improve the Andean Pipeline.

Other Investments

Ecopetrol has assigned US$387 million to other investments, of which (i) US$25 million will be allocated to energy diversification projects, among them the Ecodiesel plant in Barrancabermeja, which will use palm tree oil, and (ii) US$105 million will be allocated to information technology & research studies to be conducted by the Colombian Petroleum Institute.

Brazilian state controlled energy giantPetrobras has announced plans to invest US$1bn in it’s Peruvian operations from 2010-2013.

According to a report from Peruvian news agency Andina report, Petrobras’ CEO José Sergio Gabrielli said investment will be focused on exploration & production activities in blocks which the Brazilian oil major already operates in Peru.

Petrobras’ five-year strategic plan foresees investments outside of Brazil totaling US$15.9bn, as we reported earlier this year; Petrobras- a shining light for oil services firms

In 2010 Petrobras (PBR) intends to invest in the region of $180mn in Peru, mainly on exploration on block 58 in the Cuzco region, as this area is regarded to enjoy a high potential for natural gas reserves.

Petrobras is also looking to invest in the drilling campaign in block X located in Talara. “We will do 100 development drillings on block X,” Petrobras Perú general manager Pedro Grijalba was quoted as saying.

The total natural gas potential for block 58 will be confirmed by 2012, Grijalba said, according to a separate Andina report.

“We need to drill new wells in the region and collect seismic data to finally confirm the reserves. We are very optimistic about it,” the executive was quoted as saying.

In November, Petrobras confirmed a natural gas discovery at well Urubamba-1X. The discovery could add significantly to Peru’s natural gas reserves. It is thought that Peru currently has up to 15 trillion cubic feet of gas reserves in it’s southern Blocks, up to 3 trillion cubic feet in Block 56, more than 9 trillion cubic feet in Block 88 and 2 trillion cubic feet in Block 57.

Even though Petrobras has not released reserve estimates, Peru’s President Alan García said the discovery could hold more than 1trillion cubic feet of natural gas. Petrobras is a 100% shareholder in the Urubamba concession.

Alvaro Uribe, President of Colombia, has always been a preacher of foreign investment as a fundamental economic policy that would help fuel the country’s growth.

But there is a major reason he wants to promote Colombia as a foreign investment destination so passionately.  The Colombian economy shrank 0.5% during the second quarter of this year, pushed down by the industrial & retail sectors, which are, the biggest employers in the domestic economy. It was the third straight quarter in which the Colombian economy has fallen, the longest slump in a decade.

In order to spur growth in Latin America’s fifth-biggest economy, the government has decided to spend over $28.5 billion in infrastructure projects, whereas the Central Bank has cut rates from a record high of 10% in November 2008 to a record low of 4% in September this year.

Where the Money is Flowing to

To date, foreign investment has mainly focused on the oil, mining & manufacturing industries, with foreign investment in the oil sector exploding during the last few years. From small independent oil & gas companies such Pacific Rubiales, Benchmark Energy & West Canyon Energy to big multinationals such as Exxon (XOM)  British Petroleum (BP).

Oil sector investment has risen eight fold since 2002, last year the inflow of money into the sector was in the region of $3.5 Bn to finance projects in the Magdalena Medio and llano basins. The latter has barely been explored and it is the one that would seem to offer the biggest potential going forward.

Foreign investment in the mining and quarrying sector has been propelled for the recently discovered gold &coal fields in different regions of the country. FDI in this sector has grown 29% based on year-to-date figures. Furthermore, Colombia enjoys the largest coal reserves in Latin America. It has over 17 billion tons in coal reserves, while annual production is only 70 million tons, less than 1% of measured reserves.

The financial sector has recently been targeted by major financial services companies such as Citigroup  & HSBC which are currently offering first floor services, whilst Fitch Rating Services recently bought a major Colombian rating agency.

The Colombian stock market has also recently entered into an agreement with the Peruvian and Chilean stock markets to study the possibility of markets’ integration, widening the opportunities for foreign investors & speculators to have some exposure in the region with most potential in Latin-America.

Finally, the retail sector has seen heavy inflows from multinationals such as France’s Casino and Carrefour and Chile’s Fallabella that took advantage of the expansion in the internal demand driven by the strongest growth of the economy in more than four decades. Retail has grown by a factor of 10 since 2002

Where are the Opportunities

Sadly Colombia has suffered in the recent past due to security issues, with most of the required investment in the biggest projects being held back by the preceding governments, so opportunities are virtually endless in various sectors.

The llanos basin is a much underexplored & underdeveloped area that accounts for over 40% of Colombian territory. Investment in oil, agricultural & infrastructure sectors will expand in the years to come as new oil discoveries & bio-fuel projects stimulate the government intervention in infrastructure.

Because of anti-cyclical policy and decades of long decay, it is expected that infrastructure investment will boom in the coming years. Recently, the government announced over $2.8 Bn in spending for highway projects, just for 2009 that are to be financed by selling shares of the national petroleum company, Ecopetrol.

Tourism & construction should also benefit as the recognition of Colombia as a major tourist destination in Latin-America based on its tropical weather & incredible bio-diversity. Cities like Cartagena, Santa Marta and Barranquilla have been targeted for investments in hotel, condo and golf projects. The coffee region was categorized by The New York Times as one of the most attractive regions in the world.

Many thanks to Luis Rodriguez of E-Bursatil for this guest post

With the aim of increasing international trade, 22 emerging and developing countries, including seven Latin American nations, signed an agreement to reduce tariff barriers by 20% on a minimum of 70% of the products they regularly trade among themselves.

The list of signatories, who met on the sidelines of the World Trade Organization (WTO) ministerial summit in Geneva, includes Argentina, Brazil, Paraguay, Chile, Mexico, Uruguay and Cuba.

“This is a very important step for the South–South cooperation system and is a clear demonstration that developing countries have the will to continue this work in a process of liberalization that is compatible with development,” announced Argentina’s Minister of Foreign Affairs and International Trade Jorge Taiana, according to EFE. Taiana added, “This shows that multilateral trade negotiations are not a problem for developing countries. We know how to work together and reach agreements.”

The treaty, signed on Dec. 2, is included in the Global System of Trade Preferences Among Developing Countries (GSTP) and, reported AFP, is part of the São Paulo round of negotiations for the liberalization of trade between nations in the southern hemisphere, which began in 2004.

The signatories must declare their commitments and define the goods included in the agreement before September 2010, when the new tariffs will enter into vigor.

“Trade among Southern countries is a good response for overcoming the crisis. In the case of Brazil, the diversification of our trade was a key factor in enabling us to suffer less than other countries from the effects of the global financial crisis,” said Brazilian Foreign Minister Celso Amorim to EFE.

Transactions between these 22 countries, reported Amorim, accounted for approximately 18% of international trade and almost half of global agricultural production.

Supachai Panitchpakdi, the director of the United Nations Conference on Trade and Development (UNCTAD), told AFP that the agreement should increase trade between the nations involved by US$8 billion per year.

After the Venezuelan government announced an audit of three private banks “behind closed doors”,  Hugo Chávez announced that he would merge the three institutions to create a new State bank called Bicentenario.

This, reported AFP, brings the total number of organizations audited by the executive branch in the past two weeks, as a result of alleged irregularities in their accounts, to seven. After the nationalization of Banco de Venezuela, which concluded this year, the State will control 25 percent of the banking sector, making it the most powerful player in the financial system.

The most recently affected institutions were Central Banco Universal, Banco Real and Baninvest, which together account for 1.8 percent of total deposits in the Venezuelan banking system, the Banks Superintendency (Sudeban) stated to AFP. “It comprises an audit behind closed doors to rehabilitate these banks,” explained Finance Minister Alí Rodríguez Araque.

The decision against the three banks, reported AP, was announced four days after the government decided to close the Canarias, Confederado, Bolívar and ProVivivenda (BanPro) banks after a ten-day audit process. The four banks taken over account for 5.5 percent of total system deposits.

According to Reuters reports, Rodríguez Araque denied that Venezuela was going through a banking crisis and attempted to calm fears over the health of the financial system. “The national banking system is not in a state of crisis,” assured Rodríguez Araque, who also underscored the “solidity and stability” of the sector.

Despite the minister’s statements, reported AP, the moves made by the executive branch against these banks caused unease in the local financial sector and there were massive cash withdrawals at some institutions. Some institutions were even forced to resort to loans between banks to alleviate liquidity problems.

Chávez, reported Europa Press, warned that he is prepared to take over all of the private institutions in the country if he is “forced” to. “We have set our sights on another group of banks. Believe me when I say that if I am forced to take over all Venezuelan private banks then I will,” he stated.

“The oligarchy is looking to make a run on the banks and thinks that will cause Chávez to fall. What’s going to fall is the private banking system, not Chávez,” assured the president according to BBC.

Italian energy company Enel has announced that it will invest a further US$7 billion in Latin America over the next five years, providing an indication that the global financial crisis has abated in the region.

“The region is one of the places which has suffered least with the global financial crisis and another important issue is that it has a stable regulatory framework,” remarked Enel CEO Fulvio Conti during the inauguration of the 4th Italy–Latin America Caribbean Conference, reported Reuters.

The conference between the Mediterranean country and those of Latin America and the Caribbean covered issues relating to economic and social policies implemented by Latin American governments to deal with the effects of the global financial crisis. In this regard, Brazilian Planning Minister Paulo Bernardo stressed that the obstacles and challenges posed by the economic situation are being tackled “optimistically.”

Meanwhile, reported El Nacional, Panamanian President Ricardo Martinelli assured, “Italy has the chance to be a leader in Latin America,” while taking part in the meeting.

Conti went on to say, according to Finanzas, “Through the purchase of Endesa, which Enel holds the majority stake in, we have focused on the important objective of turning ourselves into a multinational company whose presence ranges from Eastern Europe to South America.” Enel is the largest electrical group with operations in Latin America through its Spanish subsidiary Endesa and through Enel Green Power.

Conti also explained, reported EFE, that Enel subsidiaries cater to 12.4 million Latin American customers, who account for 20 percent of the group’s coverage. “13,000 of our worldwide total of 82,000 employees work in Latin America,” he added.

According to Conti, growth rates in Latin America are evident, and in countries such as Brazil, Chile, Colombia and Peru, “Debt has been reduced, monetary reserves have been strengthened and public accounts have been reorganized, which is one of the most conflictive issues in the region.”

However, their praise regarding economic administration does not mean Italians are oblivious to the region’s typical problems. “Infrastructure must be improved to avoid risks in the supply of electrical energy,” said Conti, according to Clarín.

Enel has set itself the following objectives for the region: improving energy distribution based on its business platform, developing significant investments and promoting the use of technological innovation in the field of energy.

emerald mining in Colombia

Colombian Mines and Energy Minister Hernan Martinez maintains that investor confidence and increased security in the country have encouraged foreign investment in mining exploration and production.

Despite the global financial crisis, according to El Colombiano, 2009 is likely to see a record US$2 billion invested in mining, Colombia’s second most important sector after oil.

Speaking at the 5th International Mining Fair in Medellin, Martinez said that “the reality is that the democratic security offered by the government has strongly boosted mining investments.” The fair, according to El Espectador, attracted 163 mining companies from Canada, Germany, Poland, Brazil, Peru, Chile, the U.S., Bolivia, Mexico and Colombia.

Martinez said that most foreign investment was channeled to the north of the country, according to El Colombiano, particularly into coal mining in the Cesar and Guajira regions, and Cienaga and Puerto Bolivar port expansion. He also highlighted the recovery of the sector in 2009, despite fallout from the international financial crisis.

Arturo Quiroz Boada, head of the mining company section of the Colombian National Business Association sponsoring the fair, endorsed Martinez’s predictions. Colombia signed a cooperation agreement with the Australian Mining Equipment and Services Export Association on Sept. 9, he told El Colombiano, for technology that will improve production methods in Colombian mines.

During the fair, Eduardo Chaparro, Economics Affairs Officer at the Natural Resources and Infrastructure Department of the Economic Commission for Latin America and the Caribbean, spoke to EFE about the speedy recovery made by Latin America in general and the Colombian mining sector in particular, after the crisis causing the loss of 7,000 jobs in the country.

“The contribution made by the mining industry,” he said, “has been decisive and is, perhaps, the sector that is going to stage the fastest recovery from the crisis, despite the fact that the quality and quantity of employment suffered severely.”

Far from the earthquake unleashed on international markets by Dubai’s request to defer payment of its multi-million dollar debt, the two major stock exchanges in Latin America, Mexico City and Sao Paulo finished November with significant gains in what was the first month world economies began to show signs of recovery after the onset of the global financial crisis.

Mexico and Sao Paulo, ended November with gains of 8.07 % and 8.93 % respectively. Next came Colombia, with a 5.22 % gain, Caracas (5.04%), Montevideo’s IMEBO (1.63%) and Buenos Aires’s MERVAL (1.49%). The only two regional markets without increases were Lima (-0.59%) and Santiago (-1.78%).

On Nov. 26, noted Reuters, global markets tumbled on worries about Dubai’s debt problems and fears that a renewed financial crisis could put an end to the burgeoning recovery.

Regional markets showed a mixed performance during the last week of November. The highest gain, according to EFE, was registered in Colombia with 1.58 % and the greatest loss came in Santiago with a 2.05 percent drop.

A study by Compass Group consultants for La Tercera revealed that shares of several large companies listed on regional stock markets were returning to pre-crisis values.

The market value of 104 companies, linked to 40 of the largest economic groups (in Argentina, Brazil, Chile, Colombia, Mexico and Peru), was only 1.2% below the prices recorded in late 2007, representing a market value approaching US$803 billion. The driving forces of recovery, the report said, were the consumer goods and financial services sectors.

Asked whether the crisis in Dubai could lead investors to reconsider markets such as Latin America, Jaime Sabal, professor of corporate finance in emerging markets at Barcelona’s ESADE business school, told BBC Mundo that it “should have no impact whatsoever.” Sabal continued, “What happens in Dubai is a particular case, related to the real estate sector and should have no impact on other markets.”

Carlos Villegas, president of the state-owned oil company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), has announced that the country plans to invest US$11 billion in the sector over the next seven years in order to develop its entire oil and gas production chain.

Villegas explained that YPFB needs to invest US$7 billion over this period, and the rest must be supplied by transnational companies operating in the country. The funds will be used to invest in exports, exploration, transport, logistics and oil and gas storage.

This “need” arises from the priority set by the government to cover domestic demand for liquefied petroleum gas, gasoline and diesel, which Bolivia currently does not meet, forcing it to rely on imports from Argentina and Venezuela. Bolivia’s domestic natural gas network is also underdeveloped, which means that the government subsidizes LPG cylinders and diesel with Treasury funds.

However, the announcement was criticized by Bolivian experts. According to Álvaro Ríos, former minister for the industry between 2003 and 2005, YPFB “needs to come to terms with reality,” given that it has already received a US$1 billion loan from the Central Bank of Bolivia. “YPFB does not have the funds that Villegas is talking about, and even if it did, it lacks the business management to administer them,” said Ríos to El Deber.

Meanwhile, oil and gas expert Freddy Zaratti believes it will be difficult to secure these investments while Bolivia gives no guarantees to foreign companies.

Bolivia also announced its intention to review contracts covering gas sales to Brazil and Argentina, reported El Deber. With respect to Brazil, this consists of renegotiating the quantities of gas the country purchases (between 17 and 31 million cubic feet per day). Bolivia is looking to sign a more specific contract with Argentina which provides foreign firms with investment guarantees.

Planning Minister Noel Aguirre urged Villegas to discuss these contractual changes and warned El Deber that modifying the agreements could affect the country’s economic stability, given that the majority of Bolivia’s public funds come from oil and gas sales.