Monday 4 December 2023

Chinese company building Ruta 32 had never suffered a bureaucratic hell like the one in Costa Rica

Expansion of the road to Limón should have been ready in three years and it has already been more than six years

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2 December 2023 - At The Banks - Source: BCCR

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QCOSTARICA — The China Harbor Engineering Company (CHEC) has successfully built public infrastructure throughout Latin America for almost 40 years, bringing development and competitiveness to the entire region.

The work on Route 32 to expand the road between Río Frío and Limón to four lanes is almost 3 years behind schedule and with only 83% of the work done, its completion is indefinite. freepik

During these four decades, the company has been hired to develop more than 40 million-dollar projects and today, it has a presence in 17 Latin American countries with more than a thousand workers and a successful track record.

However, in Costa Rica, the story has been different.

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And in all its experience, CHEC had never suffered a bureaucratic hell like the one in Costa Rica, according to sources close to the company.

Endless expropriation processes for land, lack of money to guarantee the construction of all works, demands from communities to change designs, and lack of clarity in actions as basic as the relocation of public services, are some of the elements that make up “that hell” of bureaucracy when it comes to building public works in Costa Rica.

The expansion of the 107 kilometers of the ruta 32 to four lanes between Río Frío and the city of Limón, in the province of Limón, became a real headache for CHEC that affects their reputation at the local level and, in the worst case, causes them to lose money.

The work started in 2018 as a project that had to be completed in just three years, and by December of this year (almost 6 years later), only 83% of the complete project will have been delivered; However, the lack of sufficient overpasses and other safety works would put people who travel and live near the project at high risk.

In that sense, the initial term has already doubled, and with it, the losses accumulate.

“CHEC has never had a similar experience before; There are losses, but because of the company’s sense of commitment and responsibility, they want to finish the work,” said a source close to the company.

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Worst of all, the more time passes, the higher the losses will be for the Chinese contractor, not only due to the increase in the cost of materials but also due to the payment of salaries and other charges generated by delays.

In the case of materials, for example, a 40% cost increase was reported between February 2020 and February 2021, according to the Cámara de la Construcción de Costa Rica (Construction Chamber) due to the container crisis, while currently there has been a reduction in some materials.

In principle, Luis Amador, Minister of Public Works and Transportation (MOPT), indicated that the work would be completed in April of2024, while sources close to the Chinese company believe that, because the final date on which it will be completed has not been defined, when expropriations and the relocation of public services will be done, a more realistic delivery date would be at the end of 2024.

To this end, design modifications are being considered to eliminate approximately 10 overpasses and replace them with roundabouts. Yes, roundabouts, on a road with a speed limit of 80 km/h.

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On the Circunvalacion (Ruta 39) in San Jose, the government is currently spending millions of dollars to eliminate roundabouts.

Furthermore, instead of building specific areas to make U-turns, the MOPT proposal, with the aim of reducing expropriations and avoiding the construction of a third lane for turns, consists of simply cutting the barrier that separates both sides of the road, allowing drivers to make turns at more points. This would require drivers to reduce their speed from approximately 80 km/h to almost 0 in the left lane.

The idea is that the work is less expensive, the number of pending expropriations is reduced and the work is completed.

“We need about US$100 million to finish the work, at the same time we have a claim from the CHEC company for about US$50 million. With the design change we have made, costs are lower and we think it is possible to finish in April 2024. That is our goa,” said Amador.

“The government’s expectation tends to be very optimistic,” respond sources who prefer anonymity, especially if the background is considered. This same source indicates that the funds required to complete the work could be double what was estimated by the minister.

To explain the failure of public works construction in Costa Rica, CHEC would have to be separated from the equation and get involved in untangling a tangle of bureaucracy that has other projects in limbo.

Examples are the route to San Carlos, with more than 50 years in construction. The expansion of the road between San José and San Ramón and the construction of a new highway to Cartago, are other examples.

In all these cases, the story is similar: lack of money and excessive bureaucracy.

“Since 2014, when the legislative file to approve the financing of Route 32 was being discussed, we warned on several occasions about the lack of project planning and the inadequate procedure for calculating the cost of the works to be carried out. Doubts were even expressed about the economic viability of the plan due to the variability that could occur in its final costs,” Carlos Trejos, president of the Costa Rican Chamber of Construction, had said previously.

The omission of first-order technical aspects affected the work and generated delays and significant increases in costs that would have to be covered by taxpayers, the expert added.

For example, when it began, there were 1,200 expropriations pending and to date, the State has not been able to acquire all the land. At this time, more than 250 parcels have yet to be expropriated.

In that sense, legislators and businessmen of the Caribbean province call on the government to promote the work.

“The impact is unquestionable and incalculable since 80% of imports and exports move through Limón. Any delay or limitation in the mobility of goods and people has an enormous economic cost and, of course, complicates the development of tourism, commerce, industry and other areas,” said Rubén Acón, president of the Chamber of Industry, Commerce and Tourism of Limón.

When will the work be completed?

Government and sources close to the Asian company differ.

Chain of delays

Ten years have passed since the contract to expand the highway to four lanes was signed and there is still no clarity as to when the work will be ready due to the Costa Rican bureaucracy.

2012: The government of Laura Chinchilla and the CHEC company sign the contract for the expansion of Highway Route 32 to four lanes between Río Frío and Limón.

February 2015: Without a preliminary project, and with multiple doubts, deputies approve a loan with China for US$450 million to expand Route 32 to four lanes.

April 2015: A law is passed to expedite expropriations, but in practice it does not work and the processes continue to last years.

November 2017: The government of Luis Guillermo Solís gives the order to start the work, but until that moment there were 1,200 expropriations pending.

March 2018: The felling of trees for the expansion to four lanes of the 107 kilometers between Río Frío and the center of Limón begins on March 5 and with this the expansion of the road truly begins.

November 2022: Seven months after taking office, the government of Rodrigo Chaves recognizes that the route expansion is underfunded and has inadequate planning. MOPT  Minister Luis Amador estimates that US$500 million is required to complete the work.

September 2023: The minister points out that the road will be ready in April 2024. For this, only US$100 million is required for a cheaped-down version of the remainder of the project.

The works:

  • Start of work: March 2018
  • Deadline to finish: March 2021
  • Current Termination status: Indefinite



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