China and Route 32: Government Cornered as Loan for Expansion Approaches Expiry - Expat Community

China and Route 32: Government Cornered as Loan for Expansion Approaches Expiry

Nov 17, 2023 | Costa Rica, News & Articles | 0 comments

If the China Export-Import Bank (ExIm Bank) decides not to extend the deadline and amount of financing for the expansion works on Route 32, between Río Frío and Limón, the Ministry of Public Works and Transportation (MOPT) and the National Road Council (Conavi) will find themselves in a tight spot.


The 107-kilometer road modernization project has a cost of $534 million, with $465 million financed by the Chinese bank. The China Harbour Engineering Company (CHEC) is responsible for the project.


The remaining funds are expected to be provided by the Costa Rican government. By August 2023, 65% of the loan granted by the Chinese bank had been used, amounting to over $302.9 million, leaving 35% (over $162 million) yet to be executed.


The loan agreement with ExIm Bank expires in April 2024, and the deadline for the completion of the works is set for March of that year. However, according to MOPT and Conavi, additional resources ($157 million) and more time would be needed to finish the project with complementary works connecting to five cantons (Pococí, Guácimo, Matina, Siquirres, and Limón).


Luis Amador, Minister of Public Works and Transportation, emphasized that they must demonstrate to the Chinese bank that there is a plan to complete the project. The proposal includes the construction of 9 roundabouts instead of the interchanges and overpasses originally planned.


“The loan expires in April (2024), and to extend the loan period, so we can continue using the funds after April, we need to demonstrate that there is a plan to finish the work. To prove that the road is completed, knowing that there are a series of claims that consume resources and a lot of things. But, to finish the work, I need to show that with what remains in the bank, that road can be enabled,” said the official.


The minister emphasized that if they maintain the interchanges and overpasses linking communities along the route, it would not be done “on time and cost.” According to the official, the readjustment is based on studies by the Directorate General of Traffic Engineering (DGIT), despite concerns from some deputies and mayors of the five cantons impacted by the works (Pococí, Siquirres, Matina, Guácimo, and Limón).


“It is the only way to convince the bank (ExIm Bank) to give us an extension. If the bank does not give us the extension, the funds will expire in April, the money is gone, and the project is over, and it ended where it ended, there dumped,” commented Amador.


It is impossible to ignore that the will of the Chinese institution will be discussed at the same time the Costa Rican government issued a decree excluding companies from that country from the possible development of 5G telecommunications networks.


This decree includes the Budapest Convention, of which China is not a signatory. In effect since 2004, it is the first international treaty aimed at addressing cybercrime and crimes on the Internet by harmonizing laws between nations.


Will this affect the negotiation to extend the credit for Route 32? The outcome is uncertain, but it is a detail not overlooked by the authorities, and they will hope that the negotiation, led by the Ministry of Foreign Affairs and Worship (MREC), will be successful.


If the bank does not agree, MOPT and Conavi will have to look for a new source of financing, which eventually will have to go through the scrutiny of the Legislative Assembly.


“If the bank does not give us the extension, in April, the funds will expire, the money is gone, and the project is over, and it ended where it ended,” concluded the minister.


The most recent completion date was set for February 8, 2023. However, Conavi now estimates that completion will occur in December 2024.


Construction tasks began in November 2017 and were supposed to be completed in October 2020. The original deadline was not met, and during this time, multiple extensions were granted due to delays associated with pending expropriations and disputes with the contractor.


Out of the 107 kilometers comprising the road modernization, 4-lane sections have been opened between kilometers 63 and 84 (Eusse Gas Station to Puente Destierro) and between kilometers 110 and 133 (Espavel to Venecia).


Before the end of the year, the stretch between kilometers 97 and 100 in Siquirres will be opened to 4 lanes.



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