Airport Contract Dispute Dragged On

December 24, 2004

A year of negotiations involving myriadgovernment agencies and an arbitrationcourt proved unsuccessful in resolving themultimillion-dollar dispute regarding theoperation and renovation of JuanSantamaría International Airport.The dispute regarding how much airportoperator Alterra Partners can chargein airport user fees will drag into nextyear.Alterra Partners, whose major partneris construction giant Bechtel, claims it cancollect user fees totaling $18.6 million tocover development and financing expensesfor the renovation of the country’smain airport.In April, the Ministry of Public Worksand Transport (MOPT) asked theComptroller General decide the fate of thefees. A scathing report by the Comptrollerlast year raised questions about the fees andhalted the airport’s renovation. Foreignbanks financing the renovation suspendedthe last $30 million of Alterra’s $120 millionloan until the dispute is settled.The Comptroller responded toMOPT’s request saying $3.4 million is thetop amount that could be collected fordevelopment fees.Both parties cite the contract and subsequentagreements in their cases.In May, MOPT officials announced thestart of two months of last-ditch negotiations.Settlements were proposed and criticizedand in June Alterra announced plansto seek arbitration to settle the dispute.In August the dispute entered arbitrationand in November the arbitrationpanel decided against Alterra’s suit seeking$79.1 million for losses and damages.The dispute returned to negotiations inDecember.By year’s end, the disputing partieshad reached a preliminary agreement.However, the proposal still needs theapproval of the comptroller.

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