Harris Gomez Group

You Are Viewing

A Blog Post

Chile Infrastructure Project Overview Part 2

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.

However, 2019 will also see the debut of two new mechanisms in the country’s 20-year old concessions system: concession ” packages” and a new infrastructure fund.

CONCESSION PACKAGES FOR HOSPITALS AND AIRPORTS

The mechanism to award more than one concession under a single contract will be used in hospital and airport projects. According to information from the public works ministry (MOP), most of these contracts will be divided by geographical area and will be tendered between this year and 2021, with the first being the central south Maule region. The idea of tendering multiple concessions is to make the contracts more attractive by achieving a level of scale that works better than tendering several US$100mn contracts.

This new concession “package” already started with the tendering of 3 hospitals  Cauquenes, Parral and Constitución hospitals in Maule region for US$363mn. After that, two more packages are expected in the Bio Bío (US$390mn) and O’Higgins and Metropolitana regions (US$330mn).

In total, the government plans to build 18 hospitals under the PPP model requiring US$2.5bn before 2022.

The government also plans to use the concept of concession packages for the southern Balmaceda and Aysén airports (US$151mn), which will be tendered as a single contract in May, according to public works minister Juan Andrés Fontaine.

INFRASTRUCTURE FUND

Earlier this year, and following over 18 months of debates,  Congress passed a bill to create a new infrastructure fund that is expected to reach US$9bn within five years. Covering general transport infrastructure, border crossings and other public works, the fund aims to expand, conserve, develop, and invest in infrastructure projects. It will receive resources from road tolls as concession periods come to an end.

After the approval, public works minister Alberto Undurraga described this project as “the most important public-private investment initiative since the creation of the concession system,” and that it would add to the US$6.7bn in projects the current administration will leave in execution as government changes in March.

URBAN MOBILITY

Currently, there is US$7.782bn pipeline across seven projects, five of which involve expansions or new lines to Santiago’s Metro system, with the most likely to start works during this year being the US$365mn extension (started in March) to the recently opened Line 3 and the US$476mn extension of Line 2. In total, the government aims to add 75km to the capital’s subway network with the new lines and the extensions to lines 3, 2 and 4

The line 3 expansion involves adding 3.8km and three new stations to the line, which was opened in January, bringing its total length to 25.8km between Quilicura and La Reina. The works are expected to be finished by 2022, benefiting around 210,000 users,

Local newspapers quoted Louis de Grange, Head of Metro, explaining that President Sebastián Piñera requested a proposal that would take the total Santiago subway network to 300km, which would entail adding 85km to the system after the currently planned works are completed.

The plan would include the recently announced Line 10 and further extensions to existing lines, such as the proposed stretch to take Line 7 into the eastern Lo Barnechea district.

Outside the capital, 2019 tender is expected for a long-awaited light rail connecting La Serena and Coquimbo (US$400mn).

Infrastructure spending will be consistent over the next 5 years. There are opportunities ranging from engineering, technology, and construction services to investment and ownership of concessions.

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