Saturday, 19 October 2019
Harris Gomez Group - Chile Infrastructure Project Overview
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Harris Gomez Group - Chile Infrastructure Project Overview

As Chile emerged in the early 1990s, it became clear that its infrastructure was not capable of supporting its growing economic activity. The country decided to move forward with a PPP model for its major construction projects, particularly in improving its previously failing road network.

Since 1994, Chile has engaged the private sector in 36 PPP projects with a total value of US$5.5 billion. The projects contracted thus far comprise 24 transport projects, nine airports, two prisons, and a reservoir. Many of the original European and Canadian companies who participated in the 90´s achieved sizeable returns.

Fast forward to today, infrastructure and mining investment will be the drivers of Chilean growth this year. The government of Sebastián Piñera plans to tender US$2.6bn in concessions this year, which are part of a wider plan to tender an average of US$2.4bn per year until 2022. Most of the investments will be aimed at highways, hospitals, and water reservoirs.

Highways

In total, 49 highway projects will require investment of US$16.736bn.

In 2019, the public works ministry (MOP) will tender the US$521mn renovation of the Talca-Chillán section of Route 5. Outside of the renovations program, the ministry will also launch tenders for the first concession of the Villarrica Route (US$363mn)and the Chiloé longitudinal road (US$375mn). 

It was reported this week in the local news that the government will add seven road ancillary works to the concessioned stretch of Route 5 highway connecting with Chillán. The works consist of two new overpasses connecting the western and eastern halves of the city; the improvement of two existing ones; eliminating two toll stations near Talca; reopening an underpass, and road maintenance for a 10-year period. This will push the estimated capex from US$521mn to US$796mn. The tender is scheduled for next month.

For the coming years, other re-tenders include six sections of Ruta 5 whose concessions will expire, as well as the roads leading to the ports of Valparaíso (Ruta 68, to be tendered in 2021) and San Antonio (Ruta 78, to be tendered in 2020).

  • Ruta 68: Currently operated by Rutas del Pacífico, a subsidiary of Spanish infrastructure group Abertis. The road runs for 141km, has four tunnels, 16 bridges and 22 bypasses, according to the public works ministry’s (MOP) concessions office. The current concession is set to expire in August 2024.
  • Ruta 78: Known as Autopista del Sol, it is currently operated by a similarly named concessionaire, which is also a subsidiary of Abertis. This route covers 131km and was awarded in 1995. The current concession contract is set to expire in March 2021, although Fontaine told Radio Duna this week that, as part of the plans to expand the capacity of the highway, the MOP was studying extending the current contract for 24 months to give the concessionaire time to finance the expansion.
  • It should be noted that a project to build a corridor linking Ruta 68 and Ruta 78 was awarded to Grupo Costanera in February .The US$270mn contract entails building a 9.2km four-lane corridor between the Maipú and Pudahuel districts of Santiago, linking the two highways

As for Ruta 5, the road is divided into several sections, which in some cases have different concessionaires. The ones that Piñera’s government is aiming to re-tender are:

  • Los Vilos-La Serena: Dubbed Ruta del Elqui, the road covers 229km between the cities of Los Vilos and La Serena in the Coquimbo region. The concessionaire, Rutas del Elqui, is also owned by Abertis and its contract is set to expire in December 2022. The previous government aimed to tender the road again last year, but it postponed the process. Before the Piñera administration took power, the then-public works minister, Alberto Undurraga, said that the definitive bidding documents would be published soon. The new contract has a budget of US$377mn and includes works on the urban sections of the highway, including widening it to six lanes.
  • Santiago-Los Vilos: Covers 218km of roads and is operated by Globalvía subsidiary Autopista del Aconcagua, whose contract is set to expire in March 2023.
  • Talca-Chillán: Entails 193km between the cities of Talca (Maule region) and Chillán (Ñuble region). It is currently operated by Ruta del Maule, which is owned by Intervial. The contract is set to expire in April 2020.
  • Chillán-Collipulli: Covers 160km between Chillán and Collipulli (Araucanía region). The road is operated by Rutas del Bosque, another Intervial subsidiary, and its concession contract is set to expire in May 2020.
  • Collipulli-Temuco: Runs for 144km between Collipulli and Araucanía capital Temuco. Currently operated by Ruta de la Araucanía, another Intervial subsidiary, its concession contract will expire in February 2023.
  • Temuco-Río Bueno: Compromising 172km between Temuco and Río Bueno (Los Rios region), it is currently operated by Intervial concessionaire Ruta de Los Ríos, whose concession will expire in June 2023.

As for what the new tenders will involve, new lanes to several of these highways will be added, free-flow toll systems, better connection roads and improvements to bridges.

Next week we will provide an overview of other infrastructure projects in Chile that includes airports, ports, metro, and railway.

Information provided by BNAmericas.

Harris Gomez Group is a Common Law firm, with offices in Santiago, Bogotá, and Sydney. Over the last 18 years, we have been supporting foreign companies with their growth in Latin America. Many of our clients are technology companies, service providers and engineering companies that focus on the mining, energy and infrastructure markets. 

To better understand how we can support your management team in the Region, please contact Cody Mcfarlane at cmm@hgomezgroup.com

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