Structuring of the La Dorada–Chiriguaná Railway Corridor

The La Dorada–Chiriguaná Railway Corridor is a milestone in the modernization of railway transport in Colombia. It is the country's first railway Public-Private Partnership (PPP), comprehensively structured by the National Development Finance (FDN), the development bank specialized in infrastructure. With an investment of USD 860 million, this pioneering project will revitalize 562 kilometers of railway to connect the heart of the country with its Caribbean coast. The railway corridor will enable the movement of 5.5 million tons annually, reduce logistics costs by 20%, and decrease CO₂ emissions by 37,000 tons annually, promoting more efficient and sustainable logistics. Its design incorporates cutting-edge technology, environmental, social, and governance criteria, and a flexible operational model. The FDN, with its vision and leadership in this project, has proven to be a catalyst for railway development, attracting private investment and designing high-impact solutions that transform lives and regions. Project Description: The La Dorada–Chiriguaná Railway Corridor represents the most ambitious railway reactivation project in Colombia. It is the first Public-Private Partnership (PPP) in the railway sector structured and awarded under Law 1508 of 2012, which is the legal framework regulating PPPs in Colombia. With an investment exceeding COP 3.4 trillion (approximately USD 860 million), this initiative aims to rehabilitate and modernize a logistics axis of more than 560 kilometers, connecting the center of the country with its Caribbean coast, and facilitating multimodal connection with the main coal export corridor of the country. The comprehensive structuring was led by the National Development Finance (FDN), a Colombian development bank specialized in infrastructure, recognized for its expertise in technical, financial, and legal structuring of complex projects such as metro lines (Bogotá and Medellín), port access channels, hospitals, and educational centers, among others. With the support of international and national consultants — SETEC (France), Deloitte, and Durán & Osorio — the FDN designed a robust PPP model, attractive to the market, with high standards in sustainability, performance, and contractual efficiency. The project was awarded by Colombia’s National Infrastructure Agency (ANI) on April 3, 2025, through a bidding process that attracted three qualified bidders, demonstrating the quality of the structuring and market interest. The awarded consortium is composed of a Spanish firm and two Colombian firms. The concession contract for the modernization and operation of the corridor has a duration of 10 years. The La Dorada-Chiriguaná Railway Corridor project includes the rehabilitation of 562 kilometers of railway, the commissioning of state-owned rolling stock, the possible addition of rolling stock from the concessionaire, the implementation of modern control and signaling systems, and the execution of social and environmental investments in the 25 municipalities influenced by the corridor, benefiting an estimated 400,000 people. With the capacity to move up to 5.5 million tons per year, this project will contribute to a 20% reduction in logistics costs, an annual decrease of 37,000 tons of CO₂, and a strong boost to regional economies in the center of the country and the Caribbean coast. Additionally, this project is consolidated as a commitment to sustainable, efficient, and resilient logistics. FDN Innovation and Added Value: The La Dorada–Chiriguaná Railway Corridor constitutes an innovative milestone as the country's first railway PPP, requiring the adaptation of complex structuring methodologies to a sector historically neglected in Colombia in terms of infrastructure. FDN's value proposition introduced innovations such as: • A business model that allows the participation of third-party operators. • State-of-the-art signaling, communication, and train control systems, with fiber optics and satellite radio. • A contract with performance indicators, ESG criteria, and operational efficiency clauses that align incentives between the State and the concessionaire. • A detailed risk matrix for all involved parties, allowing anticipation of financial, operational, and technical challenges; regulatory changes, and environmental and social risks, among others. In terms of costs, the structuring carried out by the FDN ensured financial efficiency and transparency. The international consortia participating in the bidding did not propose increases in the initially planned public contributions. Additionally, the rehabilitation of existing infrastructure was prioritized, optimizing costs and times, especially due to the licensing needs that new construction would have entailed. The project obtained institutional approval and market support, maximizing the use of public and private resources. Social and Environmental Impact: The project was designed with a strong component of sustainability and inclusion. Among its impacts are: • An estimated reduction of 37,000 tons of CO₂ annually by shifting cargo from road to rail transport. • A 20% reduction in logistics costs per container, strengthening national competitiveness. • A 2% reduction in road accidents, thanks to the diversion of heavy cargo to the railway. • Generation of 32,000 direct and indirect jobs during the construction and operation stages. • A gender equity program in the operation of the corridor. • Relocation and improvement of two educational institutions located in the railway strip. • Construction of a vehicle and pedestrian bridge over the Sogamoso River, with road connection on both banks. • Recovery, signaling, and surveillance of 28 stations and 17 sidings with direct impact on intermediate communities. Additionally, at the regional level, a significant increase in the commercial dynamics of intermediate logistics nodes in cities that would become modal exchange points such as Barrancabermeja, Puerto Berrío, and Gamarra is estimated, thanks to the increase in installed capacity for cargo transfers and related services. The project promotes the generation of more efficient logistics chains for the agricultural, industrial, and mining-energy sectors, facilitating a more competitive environment for small and medium-sized enterprises. Public-Private Partnership: The structuring of the La Dorada-Chiriguaná Railway Corridor was developed within the framework of a strategic alliance between the ANI and the FDN, formalized through an inter-administrative agreement. This collaboration allowed joint work to define the most appropriate transaction model, the best technical, legal, and financial solution, prioritizing contractual balance and efficient risk allocation between public and private actors. FDN led key activities such as: • Design of the financial model and tariff proposal. • Recommendations on transaction model, concession duration, and service scope. • National and international promotion tours (United Kingdom, Germany, Spain, and the USA) to generate interest among investors. • Response to bidders' observations and adjustments to the bidding documents. • Support in the PPP award process. • Structuring of the contracting process for the supervision of the PPP contract that will execute the project. Additionally, the FDN articulated multi-actor working groups with entities such as the Ministry of Transport, the National Planning Department, Ministry of Finance and Public Credit, governors, environmental authorities, and the private sector, ensuring coherence between public policy objectives, fiscal sustainability, and technical standards. This approach facilitated the incorporation of social components such as the educational relocation program and the gender approach. Collaborative governance was key to achieving a transparent, competitive, and successful process. Lessons Learned and Replicability: This project has generated valuable lessons for the structuring of future railway projects in Latin America. Some of these lessons are: • It is possible to attract private capital to railway projects if robust contractual models adapted to the sector's operational reality are built. • The combination of rehabilitated existing infrastructure, technological modernization, and technical public management can reduce entry barriers for investors. • The role of a development bank as an integral structurer, with a long-term vision and multi-sectoral approach, adds not only financial but strategic value. • Community participation, social sensitivity, and environmental focus are not obstacles but enablers of viability and legitimacy. • The resolution of various regulatory, technical, and economic challenges in this project will serve as a reference for similar railway initiatives, ensuring the sector's reactivation and making it dynamic and competitive. • The experience gained will be replicable in future railway corridors that the Colombian government plans to launch soon, such as Chiriguaná–Santa Marta, Belencito–Bogotá, Buenaventura-Palmira, and Bogotá-Central Corridor. In summary, the structuring of the La Dorada-Chiriguaná Railway Corridor will serve as a reference for other railway reactivation projects in Colombia and constitutes a concrete example of the role that railway PPPs can play in sustainable development and territorial integration. It also consolidates the role of the FDN as a catalyst for railway infrastructure development in Colombia and demonstrates how development banks can lead complex processes, attract private investment, and design high-impact solutions that combine profitability, inclusion, and sustainability.