Airport Agreement Finally Reached

FORTY-eight hours has done what two yearscould not: delivered promises that the long-stalledrenovation of the country’s principal airport willrestart in a matter of months.Under the pressure of a 48-hour ultimatum fromthe government, Alterra Partners agreed Tuesdaynight to settle a two-year, multimillion-dollar disputewith the government regarding its contract to renovateand operate Juan Santamaría InternationalAirport, just outside San José.The long-awaited resolution means the more than$100 million airport renovation, halted since March2003, could resume by the end of October, accordingto Minister of Public Works and Transport RandallQuirós.COMPLETING the airport terminal and boardinggates are top priorities, according to Quirós andAlterra officials.The 2.2 million passengers who use the airportannually currently cram through reduced immigrationand boarding areas.“The number of passengers is growing,” Quiróssaid. “With the stoppage of these works, which under the original schedule should have beendone last October, the airport has sufferedsaturation.”The minister added that Costa Ricamust go beyond other countries in reducingairport wait times because “peoplecome here to relax.”THE agreement faces a crucial stepbefore it can go into effect and constructioncan begin. It must receive the seal ofapproval by the very institution that was thesource of the contract dispute in the firstplace – the Comptroller General’s Office,which oversees all government contracts.“I have a lot of confidence it will beapproved by the comptroller,” Quirós said.The minister said throughout the negotiationshe has taken into account all of thecomptroller’s objections and suggestions.“This was not done previously,”Quirós said.The minister said the government alsohas learned lessons from the entire experiencewith Alterra, which has been seen asa pioneering model in a broader strategy toallow private firms to supply the country’sgrowing infrastructure needs.“Future contracts and solicitations forbids will be better… so we don’t make thesame errors again in future concessions,”he said. “Not in this administration, but inones that follow, there will be concessionsfor airports in Liberia (in the northwesternprovince of Guanacaste), Limón (on theCaribbean coast) and the Southern Zone”(TT, May 13, 27).THE dispute began in 2003 regardingthe amount Alterra is allowed to charge airlinesand companies operating in the airport.The fees are often passed on to thepublic through plane ticket prices.In March 2003, a scathing report by theComptroller General’s Office raised questionsabout many of these fees, particularlythose for developing and financingexpenses (TT, March 28, 2003).Alterra officials said the contract’sfinancial equilibrium was in jeopardy if thecompany was not allowed to charge thefees they said were previously agreed onwith the government.Construction was halted after internationalbanks funding the airport’s renovationsuspended the final $30 million ofAlterra’s $120 million loan until the disputewas resolved.The comptroller’s decision stood andthe disputing parties have spent more thana year trying to find a new, fair route tofinancial equilibrium.Quirós, who is the third transportationminister to deal with the airport contractdispute, told Alterra officials Monday theyhad 48 hours to agree on a solution or thegovernment would take control of the airport,something it hasn’t done since Alterrawon its contract in 2001.FINANCIAL equilibrium was whatwas agreed to this week, including extendingAlterra’s contract from 20 years to 25years. And although more than 12 arbitrationcases still exist between Alterra andthe government, the new agreement meansconstruction can resume as soon as thecomptroller approves the addendum to theoriginal contract.Before the equilibrium agreement issubmitted to the comptroller, the TechnicalCouncil of the Civil Aviation Authority(CETAC) must approve it. The comptrollerwill then have 45 business days to make adecision.Quirós estimates final approval couldcome by the end of August or September.The primary construction firm workingon the project, Bechtel-Edica, must thenbring back construction equipment andengineers to the site. It is likely they willwait until the worst of the rainy season isover, at the end of October, to begin construction,he said.It will take at least two years to completerenovation of the terminal and boardinggates – only five of nine are complete(TT, Aug. 20, 2004). Renovation of a cargoramp is also a priority, Quirós said.ALTERRA officials previously hadsaid construction would not restart untilother arbitration involving the contract isresolved.Alterra, which is a joint venture ofBechtel Enterprises of the United Statesand Singapore Changi Airport Enterprise,has filed 12 arbitration cases, amounting toapproximately $20 million, against thegovernment for a variety of reasons,Quirós said. The most important of thecases – all still unresolved – is a $15 milliondemand against the governmentregarding costs accrued during constructiondelays at the start of the project in2001.As part of the negotiations, the governmenthas agreed to set aside $15 millionto guarantee it will be able to payshould the arbitration court order it to do so.