Thursday 1 December 2022

MOPT evaluates breaking Globalavia Ruta 27 contract

Breaking the contract with could cost taxpayers at least US$350 million dollars at best, and at worst US$700 million

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1 December 2022 - At The Banks - BCCR

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QCOSTARICA – The Minister of Obras Públicas y Transportes (MOPT), Luis Amador, reported that assessments are already being made for possible compensation to the Globalvía company in order to terminate the concession contract that was signed for Ruta 27, which connects San Jose with Caldera.

Traffic on the Ruta 27

Amador said that the analysis of possible compensation is “confidential”.

However, terminating the concession contract for the operation and maintenance of the Ruta 27 would cost between US$350 million (optimistically) and US$700 million, in the worst case, are the figures that appear in the final management report of the former technical secretary of the Consejo Nacional de Concesiones (CNC) – National Concessions Council, Eduardo Chamberlain Gallegos, who was at the head of that Council between May 30 and September 30 of this year, that is, the first four months of the current government.

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La Nacion reports that this Wednesday, after the session of the Government Council, President Rodrigo Chaves Robles, and Amador, expressed their dissatisfaction with the Ruta 27 concessionaire.

And for that reason, there is talk about the possibility of starting “from scratch” with another company.

Amador stated that the Government’s position is that “there is a general dislike” for the way the Ruta 27 operates. In addition, he acknowledged that they carried out studies to determine what it would cost to compensate the concessionaire. However, he avoided revealing the amount of those tests.

The Ruta 27 began operations in 2010. The concession contract expires in 2033.

“We saw how much it cost to compensate these people to see if we could get rid of them, it is an analysis that is confidential, but know that we already did it,” he pointed out when asked about the government’s plan to expand the route that is, to put it mildly, oversaturated.

Chaves assured that last week he met with the highest-level executives in the company, to whom he expressed his disagreement with the terms in which the contract was negotiated and added that “today everything is on the table.”

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According to the report by the former Secretary of Concessions, Ruta 27 would even have to pay for the preliminary studies carried out as part of the preliminary expansion project.

In addition, Chamberlain estimates that “quite possibly” the dispute would end up in international arbitration. And he warns: “the future of the concessions would be very compromised, as well as their legal certainty”.

At the heart of the discontent is the expansion plans for the Ruta 27. And the cost to carry it out and the possible cost passed on to users through tolls.

Read more: President: If the extension of ruta 27 is in the contract “we will enforce it”

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The section that delves into the situation of the road between San José and Puerto Caldera, the former head of the CNC refers to three scenarios that were contemplated within that council:

  1. Break the contract and look for a new concession.
  2. The State assumes the work to renegotiate with the concessionaire only the operation and maintenance until 2033 when the current concession expires.
  3. Continue with the plan to extend the term of the current concession so that the company takes charge of the expansion project.

According to the report, the first option, in addition to the very high cost of compensation, would mean that users have to wait several more years with a collapsed route, since a new concession could not be negotiated until the settlement process with the current operator is completed.

For the second alternative, the challenge would be in obtaining the resources, given the fiscal crisis is well known.

For these reasons, according to the former secretary of the CNC, after several “high-level” meetings, the decision was made to negotiate the expansion of the highway and the extension of the contract.

The report even indicates that there is already a draft of the presentation that the legal department would take to the Comptroller’s Office, to request a “preliminary authorization” and identify whether a “supplementary agreement” or an “addendum” should be made to the contract.

What is reflected in the document contrasts with the statements made this Wednesday by both MOPT minister Luis Amador and President Rodrigo Chaves.

Read more: Viaduct would be a definitive solution for Ruta 27 with serious sinking problem

The president and the minister also referred to the possible solution to the sinking of kilometer 44, which according to the Government costs US$17 million and must be assumed by the company without transferring a cost to the users and on which they have not managed to agree.

With files from La Nacion.

 

 

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