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Ecuador Infrastructure Report Q1 2013

Ecuador Infrastructure Report Q1 2013

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Additional Information

Price	$1,175.00
Publisher	Business Monitor International
Date of Report	Jan 16, 2013

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Quick Overview

BMI View: Based on quarterly data from the Banco Central del Ecuador, we have revised up our 2012
growth outlook to 15.21%. First half real industry value has surprised, significantly to the upside -
averaging 21% higher compared to H111 - however, the trend is for a deceleration and, therefore, we
believe the year as a whole will average lower. Additionally, pre-election spending, as Correa seeks to
boost popularity in a country where infrastructure shortcomings are notable, is providing part of this
boost and should sustain high growth going into 2013.
?? Major developments in the sector: The announcement in November that Ecuador's Manta Port
concession had failed to attract any bids underscores our long held pessimistic outlook for the
country's business environment. We had long held the view that the concession would be a tough
sell, given the controversial and premature end of the previous concession. With President
Rafael Correa set to run for a third term, we see it unlikely that any significant improvements
will be made to the business environment; this will result in the country continuing to fail to
attract the private investment necessary to see tangible improvements in its infrastructure.
?? In September 2012, it was announced that Ecuadorian state-controlled subway operator Metro
de Quito had received a total of five proposals for the construction of the first two metro stations
of the Quito subway line. The contract for the La Magdalena and El Labrador stations in the
city's central southern and central northern regions were scheduled to be awarded on October 15
2012. Phase 1 of the project is expected to include an investment of US$64.8mn, which will be
jointly funded by Quito's municipality and the national government. The construction work on
the La Magdalena station and the El Labrador station is due to start in November 2012 and
March 2013 respectively, with the completion scheduled to take 18 months.
?? In August 2012, the city government of Quito in Ecuador issued a tender to build the first two
stations of the Quito subway line. The contract for the La Magdalena and El Labrador stations in
the city's central southern and central northern regions, respectively, is to be awarded by Metro
de Quito on October 1 2012. The stations are estimated to cost US$64.8mn, with the first
planned metro line of Quito requiring a total investment of US$1.4bn. The subway line will
connect the city's southern district of Quitumbe with El Labrador in Quito's northern area. The
metro will comprise 15 stations, with 18 electric trains expected to operate along the line.
?? Residential construction in Ecuador has surged since the start of 2011, having increased its
contribution to total construction by 6.7% through the first nine months of the year. This was
underpinned by an increase in public housing provision and a credit-fuelled increase in private
sector developments. The government's creation of a bank designed to facilitate greater lending
to low-income families in October 2010 will have served to unlock significant pent-up demand
for new homes.
While a number of factors have boosted prospects for Ecuador's construction industry over the medium
term, weaknesses within the country's business environment will continue to present risks and cap
growth. Chief among these will be financing. Ecuador's growth trajectory still remains heavily dependent
on oil prices, which is concerning, especially given the uncertain global growth outlook. Meanwhile,
political risk will continue to provide cause for concern for investors in the country, with anti-democratic
nuances and populist policies at odds with attracting international investment in infrastructure. Ecuador's
President Rafael Correa continues to tighten his grip over Ecuador's political institutions, creating an
uncertain and inhospitable climate for private investors.

Table of Contents

BMI Industry View ............................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................. 7
Ecuador Infrastructure SWOT ............................................................................................................................................................................... 7
Market Overview ............................................................................................................................................... 8
Competitive Landscape ............................................................................................................................................................................................... 8
Building Materials ............................................................................................................................................ 9
Latin America ............................................................................................................................................................................................................. 9
Cement Forecasts ..................................................................................................................................................................................................... 14
Table: Ecuador Cement Production And Consumption Data, 2009 - 2016 ......................................................................................................... 14
Table: Ecuador Cement Production And Consumption Long-Term Forecasts, 2014 - 2021 ............................................................................... 15
Industry Forecast Scenario ........................................................................................................................... 16
Table: Ecuador Construction And Infrastructure Industry Data, 2010-2016 ...................................................................................................... 16
Table: Ecuador Construction And Infrastructure Industry Long Term Forecasts, 2015-2021............................................................................. 17
Construction And Infrastructure Forecast Scenario ................................................................................................................................................. 18
Transport Infrastructure ................................................................................................................................ 21
Outlook and Overview .............................................................................................................................................................................................. 21
Table: Competitiveness Of Ecuador's Infrastructure ........................................................................................................................................... 21
Major Projects Table - Transport ............................................................................................................................................................................ 25
Table: Major Projects - Transport ...................................................................................................................................................................... 25
Energy And Utilities Infrastructure ............................................................................................................... 27
Outlook and Overview .............................................................................................................................................................................................. 27
Major Projects Table - Energy And Utilities ............................................................................................................................................................ 29
Table: Major Projects - Energy And Utilities...................................................................................................................................................... 29
Residential/Non-Residential Construction And Social Infrastructure ...................................................... 31
Outlook and Overview .............................................................................................................................................................................................. 31
Major Projects Table - Residential/Non-Residential Construction And Social Infrastructure ................................................................................. 32
Table: Major Projects - Residential / Non-Residential Construction And Social Infrastructure ......................................................................... 32
Risk/Reward Ratings ...................................................................................................................................... 33
Ecuador's Risk/Reward Ratings ............................................................................................................................................................................... 33
Rewards ............................................................................................................................................................................................................... 33
Risks .................................................................................................................................................................................................................... 33
Regional Overview .................................................................................................................................................................................................... 34
Latin America Infrastructure Risk/Reward Ratings ............................................................................................................................................. 34
Table: Americas Infrastructure Risk Reward Ratings .......................................................................................................................................... 40
Company Monitor ........................................................................................................................................... 41
Isolux Corsán ....................................................................................................................................................................................................... 41
Semaica, Sevilla y Martínez CA ........................................................................................................................................................................... 43
Global Overview ............................................................................................................................................. 45
Methodology ................................................................................................................................................... 52
Industry Forecasts .................................................................................................................................................................................................... 52
Construction Industry .......................................................................................................................................................................................... 53
Data Methodology ............................................................................................................................................................................................... 53
New Infrastructure Data Sub-sectors ................................................................................................................................................................... 53
Construction ........................................................................................................................................................................................................ 54
Capital Investment ............................................................................................................................................................................................... 55
Construction Sector Employment ......................................................................................................................................................................... 56
Infrastructure Risk/Reward Ratings .......................................................................................................................................................................... 56
Table: Infrastructure Business Environment Indicators ...................................................................................................................................... 58