Costa Rica’s biggest Pacific port has become the first to be taken over by private management, a leap forward in the government’s push to privatize administration of the country’s ports and infrastructure.
The Sociedad Portuaria de Caldera S.A., a Colombian and Costa Rican joint venture, took the delay-plagued, outmoded port into its own hands last weekend after nearly 1,000 government workers were laid off.
The concessionaire will invest $50 million to modernize the port over the next three years and manage the port for a total of 20, according to Paul Zúñiga, the president of the Costa Rican Institute of Pacific Ports (INCOP). INCOP ran the central Pacific port for the last quarter century before the port changed hands Aug. 11.
The Costa Rican legislature approved modernization plans for the port five years ago, but snags in contract negotiations had stalled the plans. The port finally changed hands as the legislature continues discussing the Central American Free-Trade Agreement with the United States (CAFTA), expected to boost trade with the leading world trade power.
A total of 961 government workers were laid off as part of the deal, and the government will pay them $32 million in severance pay, the daily La Nación reported.
Saturday, the first day the new concessionaire operated the country’s second largest port, the government said there was a 30% increase in worker efficiency.
Zúñiga explained that though the port was open 24 hours a day while INCOP was running the show, workers were guaranteed breaks under their union contracts, so the port was being operated only about 17 hours a day.
Thirty-three government workers will remain working at the port and the concessionaire can hire as many as 300 more workers.
The private employees will work more hours and get paid less than the government workers. Zúñiga said the government will save more than $15 million the first year alone from the reduction in human resources.
“One of the biggest advantages is that the port will begin to operate 24 hours a day, which will mean a sensible improvement in the waiting times for the containers,” the Executive Branch said in a statement, adding that delays will have “disappeared” by 2008 if the concessionaire fulfills the contract.
Long delays and backups at Caldera, which many say is too small, have proven costly to consumers and importers. Last year, the port came to a complete standstill for days because too many containers clogged up the port (TT, Sept. 23, 2005).
In 2005, the Finance Ministry implemented the TICA system at Caldera. The system, which tracks and processes all Customs declarations online, is only part of the solution, said Alicia Avendaño, of the Finance Ministry.
The first port concessionaire in Costa Rica is expected to increase the port’s efficiency by 300% within about three years while making infrastructure and equipment improvements and operating the port
around the clock, Zúñiga said.
The port will also have more tugboats – which will be operated by another concessionaire, private Chilean company SAAM S.A. Sociedad Portuaria will be expanding the port’s terminal used to import grain products, among other improvements.
The Comptroller finally cleared the way for the concessionaires to take over when it approved SAAM’s contract Friday – the final of three contracts approved for the port’s modernization project.
The final stamp of approval comes after the comptroller rejected contract plans in 2004, citing a long list of defects to be fixed before the port operations could change plans.
About 65% of Caldera’s imports are grain, but the port is also a key thoroughfare for iron, aluminum and vehicles coming from Japan, Zúñiga said.
Costa Rican Chamber of Exporters (CADEXCO) president Antonio Burgués said there is no steady influx of exports through the Caldera port, though there could be.
The largest Pacific port in Costa Rica accounts for less than one percent of all exports, he said, “There’s no interest. There’s no process to develop (trade) with the west coast of the United States, Chile and Pacific Asia,” he said, adding that giving ports over to private management may be a first step to invite more trade. He said Costa Rica lacks a “global concept” of trade.
The Pacific ports of Caldera, Puntarenas and Punta Morales together represent about a quarter of the country’s imported and exported shipped goods, while Caribbean ports Limón and Moín ship the rest.
President Oscar Arias publicly expressed his support for privatizing public works last week (see “Perspective” on page 25).
First Vice-President Laura Chinchilla, Public Works and Transport Minister Karla González, Tourism Minister Carlos Ricardo Benavides, Sociedad Portuaria de Caldera president Oscar Isaza and Zúñiga attended a ceremony at Caldera Aug. 11 to inaugurate the port’s new administration.
Chinchilla spoke on the various benefits the concession offers.
“It benefits the worker to have an efficient and competitive port that will allow for the attraction of greater investment and more jobs,” Chinchilla said. “It also benefits the consumer because he will enjoy lower prices on imported goods.”
Casa Presidencial said in a statement that cutting delays will stimulate nearby industry and generate increased traffic at the port.
Talks have also begun to privatize management and modernize the Caribbean ports of Limón and Moín.
The administration also supports a bill to modify the much-criticized Law of Public Works Concessions to make the process more attractive to foreign investors.