Judges to rule on $1 billion port concession

July 12, 2012

From the print edition

Three judges will rule in upcoming days on the fate of the $1 billion Moín Port project, on the northern Caribbean coast.

The renovation contract would help modernize an area that currently has two of the worst ports in the world, proponents said. But unions representing dockworkers and banana producers filed lawsuits against several government entities and the Dutch multinational company APM Terminals to try to halt the private concession – the largest in the country’s history.

During a trial last week, the National Banana Workers Chamber and the Atlantic Port Authority’s union asked judges to annul the concession, which was signed by President Laura Chinchilla last August (TT, June 22). Union lawyers claimed the contract was done without the completion of proper economic, environmental and technical studies, and they alleged that the approved per-container rates are too high.

“We are very satisfied with the presentation of the case,” said Randall Quíros, lawyer for the banana workers.

The National Technical Secretariat of the Environment Ministry (SETENA) said it approved preliminary environmental studies, which made the concession legal. The agreement between SETENA and APM Terminals states that actual construction of the port cannot begin until all impact studies are finished and approved, said Rogelio Douglas, general manager for APM Terminals in Costa Rica.

More than two-dozen engineers, biologists, oceanographers and other researchers currently are in Moín conducting studies of the project. Douglas said not one “brick will be laid” until the government endorses the final studies, which he expects to happen before the close of 2013.Unions also complained that APM Terminals does not have a final design for the port. But Douglas said that’s impossible without finishing the studies.

“We have to do the soil testing, the ocean testing and the chemical testing of the sand before we can do a final design,” Douglas said.The Public Services Regulatory Authority argued that container rates would be higher than current rates because it will be more expensive to operate the $1 billion Moín Container Terminal. Douglas said he is confident about the arguments his team presented at trial.

In October, judges rejected an injunction filed by unions to block the contract. The National Concessions Council gave the project the green light in March, prompting unions to file the current suit. Legal arguments were heard last week, and the evidential phase of the trial concluded July 6.

Courts are not in session this week.After judges return from vacation on Monday, the administrative court will have 15 days to rule on the project’s legality.The deadline for a decision is Aug. 7. Company lawyers plan to appeal if the court rules against APM Terminals. If unions lose, union officials promised to take the issue to the Constitutional Chamber of the Supreme Court.

The legal tug of war stems from union criticism that the deal would result in a monopoly by APM Terminals on container ships. The government, however, sees the deal as a saving grace for the country’s pitiful port network. The World Economic Forum’s global competiveness report on port infrastructure ranks Costa Rica 137 of 142 countries.

Company representatives said the port would not be a monopoly since the government’s Atlantic Port Authority would still control the docks in Costa Rica. Furthermore, Douglas said while the port would receive the majority of containers in the country, tens of thousands more will be processed at other docks. Douglas said port renovation is necessary because current ports in Moín and Limón only have the capacity to take in small ships of approximately 1,000 containers. The new port would support Post-Panamax ships that can hold up to 12,000 containers.

Government officials believe the construction and operation of the terminal will lead to thousands of new direct and indirect jobs in Limón, the country’s poorest province. If the lawsuits do not cause major delays, construction for the port is slated to begin by the end of next year. The deadline for completion of the first phase is 2016.

The project has faced other setbacks, including a June 12 strike by members of the Atlantic Port Workers union. A week passed before government negotiators agreed to present a bill in Congress asking for a $70 million loan to renovate current docks.

In Latin America, APM Terminals operates ports in Argentina, Brazil and Peru. If the company can outlast the legal battles, Moín will be the company’s first port in Central America, and one of the region’s biggest.

“We are confident with the Costa Rican judicial system,” Douglas said. “We’re very pleased with the way the court was conducted. It’s also part of the reason we chose to come to Costa Rica.”

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