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Opposition leaders, government clash over Caribbean highway expansion project

November 20, 2013

Opposition politicians have been making a big fuss lately over the terms of a major loan from China to fund expansion of Costa Rica’s Route 32, a main highway to the Caribbean coast.

In June, Costa Rica signed a loan agreement with the People’s Republic of China for $395.7 million to improve and expand the 107-kilometer highway that connects the capital with the province of Limón.

The agreement was signed during a visit to Costa Rica by Chinese President Xi Jinping. As with past deals involving the Asian giant, under the terms of the loan deal with Costa Rica, China gets to choose the construction company, and they selected China Harbour Engineering Company Ltd. (CHEC).

However, last week, Citizen Action Party lawmaker Manrique Oviedo said that CHEC is an offshoot of the merger between the Communications Construction Company Limited (CCCC) and other companies. In 2009, the World Bank barred CCCC from its projects for having engaged in alleged acts of fraud and corruption in the Philippines.

The company’s contract in Costa Rica was signed without a green light from Costa Rica’s Comptroller General’s Office, according to Oviedo, and approval “was granted in only seven days.”

The last step before the project moves forward is a yes vote by the Legislative Assembly.

Oviedo also said the Chinese loan is overpriced by $70 million when compared to a recent similar contract between the National Roadway Council and a Mexican firm.

Public Works and Transport Vice Minister José Chacón Laurito last week told the daily La Nación that his ministry, MOPT, “was unaware” of CCCC’s appearance on the World Bank’s blacklist.

“Regardless of the World’s Bank notice, the country can sleep peacefully, as we signed a ‘shielded’ commercial contract,” said Chacón, referring to promised daily inspections and oversight by an independent international firm.

MOPT also will rely on inspections by experts from the Technology Institute of Costa Rica and the National Laboratory of Materials and Structural Models of the University of Costa Rica (LANAMME), the vice minister said.

The PAC lawmaker accused China of attempting to impose conditions for dispute settlements, noting that “the rights and obligations of the parties shall be governed and met under the laws of China,” according to the contract. That, Oviedo said, “would mean surrendering the country’s sovereignty.”

Chacón said those provisions apply only to the terms of the loan, and the actual project would be subject to a commercial contract between Costa Rica and the construction company.

“We will not have to go to Beijing to resolve any [possible] disputes, but to Washington, to a World Bank commission that would serve as a referee,” Chacón said.

On Tuesday, PAC presidential candidate Luis Guillermo Solís urged President Laura Chinchilla to form of a commission to review the loan prior to sending it to the Legislative Assembly for approval.

He suggested the commission be composed of members of LANAMME, the Costa Rican Engineers’ Association, the Costa Rican Chamber of Construction, the Comptroller General’s Office, the Attorney General’s Office and the Ombudsman’s Office.

Chinchilla dismissed the idea, saying, “The only commission needed is the one composed of 57 members of the Legislative Assembly, who will evaluate the contract.”

At the end of her weekly Cabinet meeting on Tuesday, Chinchilla said she was concerned the Chinese government would stop cooperating with Costa Rica due to the constant bickering of “some people” over joint projects involving the Asian giant. 

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