Alterra’s New Airport Proposal Criticized

June 11, 2004

A government official has said he doubtsthe proposal issued last week by JuanSantamaría International Airport operatorAlterra Partners will solve the ongoing conflictthat has paralyzed work on the airport.Arnoldo Camacho, the airport’s inspectorgeneral, said the proposal, presented tothe Technical Council of Civil Aviation(CTAC) last Friday by Alterra executivedirector Mónica Nágel, is unlikely to meetthe Comptroller General’s Office’s legalrequirements.The government and Alterra Partners,which holds a 20-year contract to operateand remodel Juan Santamaría, are in themiddle of crucial negotiations, which if notsuccessful could result in Alterra’s contractbeing revoked (TT, May 28).“It appears we have diverging positions,”Camacho told The Tico Times. “Wehave extreme positions. But it [the proposal]does not seem acceptable. It is not in accordancewith Comptroller General’s Office’sdispositions.”CAMACHO and Public Works andTransport Minister Javier Chaves both saidthey will need to study the proposal duringthe coming weeks before making a finaldecision.Work on Juan Santamaría has beenstalled since March2003 as a result of a disputeover financing. The14 foreign banks thathad provided financingfor the airport have saidthey will not provideAlterra with more fundingunless the governmentagrees to allow theairport manager to collect$18.6 million fromairport user fees for“development andfinancing expenses”(TT, May 7).IN an August 2001 memorandum, thegovernment, Alterra and the banks agreedto set the development expenses at $18.6million. However, the Comptroller’sOffice, which has the final say in interpretinggovernment contracts, does notrecognize the memorandum and has onmultiple occasions said developmentexpenses cannot exceed the $3.4 millionagreed to in the original contract.The government has threatened torevoke Alterra’s contract. Alterra said itwould be forced to seek approximately $150million in damages if thishappens.IN the meantime, theairport remains incomplete,as Alterra has beenunable to remodel the oldterminal building andexpand the runway.Alterra’s new proposalincludes three ways ofcoming up with the$18.6 million it sayswould make it possiblefor work on the airport toresume.Nágel called the proposal “serious” andproof of Alterra’s commitment to solving thedispute with the government.“If there’s dialogue between the partsand we get approval from theComptroller’s Office, this would onceand for all prevent more differences inthe future and would ensure the project(…) continues during the 17 years thatremain in the contract,” Nágel explained.“…We don’t want patches, we want thegovernment, the Comptroller General’sOffice and the company I represent to reacha serious solution, without excluding anypending issue, for the good of the airport’susers and the country.”THE first option is to collect the entire$18.6 million through an increase in airportusage fees. This option, according to Alterra,would prove Costa Rica honors the agreementsit makes, namely the August 2001memorandum.Under the second option, $15.2 millionwould be collected through increasedfees. The remaining $3.4 million wouldbe collected by reducing the percentageof airport revenues that is transferred toCivil Aviation or through a direct paymentto Alterra.The third option would be to collect$3.5 million through increased fees. Thesmaller increase would keep airport usagefees competitive, benefiting the airlines.The remaining $15.1 million would be collectedby reducing the percentage of airportrevenues that is transferred to the CivilAviation Council or through a direct paymentto Alterra.“IT’S now up to the government, whichmust begin a dialogue to find a solution tothe contract,” Nágel said. “Our company is apartner of the State that has invested $120million in the airport, money that wasn’tavailable to invest or that otherwise wouldhave come from the pockets of Costa Ricansthrough taxes.”During the three years of managing theairport, the State’s Treasury has received$100 million. Out of each $26 that passengerspay in exit taxes, $21 go to the governmentand $5 are reinvested in the operationand maintenance of the airport, according toAlterra.“Alterra does not want to recover itsinvestment through legal processes,” Nágelexplained. “What Alterra wants is to continuework on the airport and maintain it as italready is: a world-class airport.”Camacho remains apprehensive aboutthe feasibility of Alterra’s proposal.“The situation is very delicate,” heexplained. “We are studying the possibilities.This airport is fundamental forCosta Rica.”

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