San José, Costa Rica, since 1956

Airport Facilities Open, Contract Woes Persist

As the country s tourism high season kicked into high gear, the government celebrated the completion of long-awaited improvements at the nation s two biggest airports this week and last.

However, the improvements were over shadowed by the government s decision to begin the process of rescinding its $120 million contract with private airport administrator Alterra Partners. The move is the latest in a three-year-old dispute over how to best finance massive construction projects at JuanSantamaríaInternationalAirport west of San José.

Before the government s announcement this week, Alterra celebrated the opening of two new boarding areas that the Public Works and Transport Ministry (MOPT), which oversees the airport, demanded the company open in time for the high tourism season (TT, Nov. 10).

This week, Transport Minister Karla González and other MOPT officials flew with journalists from San José to DanielOduberInternationalAirport in Liberia, the capital of the northwestern province of Guanacaste, to celebrate the near completion of a $1 million departure terminal expected to decongest the hub of the booming Guanacaste tourism industry. Between December and April, one million tourists are expected to arrive at Juan Santamaría and Daniel Oduber airports.

The Oduber terminal, funded with a mix of private and government funds, includes a boarding area for 450 passengers that was opened Tuesday. Viviana Martín, Vice-Minister of Transport, said that though the terminal is open, workers will be putting finishing touches on it through the end of the year. Once finished, it will include a restaurant, airline offices and check-in booths.

Martín added that between now and April, $230,000 worth of improvements will be made at another eight of Costa Rica s 24 smaller airports Tobías Bolaños in Pavas, in western San José, Barra Colorado and Limón on the Caribbean coast, Laurel and Nosara in Guanacaste, and Palmar Sur, Drake and Golfito in the southern Pacific region. She added that next year there are plans for improvements at six other airports.

The Juan Santamaría contract dispute saga began in 2003 as a disagreement over the amount Alterra charges airlines and other companies operating in the airport. In March 2003, a scathing report by the Comptroller General s Office raised questions about many of these fees, which are often passed on to the public through plane ticket prices (TT, March 28, 2003).

Alterra officials said its financial equilibrium was in jeopardy if the company was not allowed to charge the fees they claimed were previously agreed on with the government.

Construction was halted in 2003 after international banks funding the airport s renovation suspended the final $30 million of Alterra s $120 million loan for the project s first two phases until the dispute was resolved (TT, June 10, 2005).

The comptroller s decision stood and the disputing parties have spent two years trying to find a new, fair route to financial equilibrium.

Alterra and its partners have put up more than $40 million to keep the long-delayed construction projects moving ahead, according to Alterra s Executive Director Mónica Nagel. Alterra resumed construction in early 2006, saying it wished to show good faith as contract addendum negotiations continued.

The Comptroller s Office has three times rejected proposed addendums to the contract, most recently in August, saying the agreement won t fix the financial imbalance (TT, Aug. 25). The government announced a Dec. 15 deadline for Alterra and the International Finance Corporation to find a resolution to its financial imbalances. After four months of negotiations between Alterra and the banks bore no fruit, MOPT this week began the process to rescind the 20-year contract to modernize and manage the country s most important airport.

Martín said the banks and Alterra have two months to present a contract amendment proposal. If they don t,Martín said the International Financial Corporation has the option of terminating the contract or seeking a new operator for the airport.

Meanwhile, the Technical Council of the Civil Aviation Authority (CETAC) is working with the International Civil Aviation Organization to train personnel who can take over management of the airport if the contract is rescinded and the government has to take over the airport.

The process to rescind the contract is expected to take at least seven months.

Alterra Director Alfredo Aguileta told the daily La Nación the company will continue airport improvements for now, while seeking a solution to its financial woes. He said nine of 10 banks that finance the airport support Alterra s new payment adjustment plan, though an agreement hasn t yet been signed.

Conflicts of Interest?

MOPT s Dec. 18 announcement came the week after Citizen Action Party (PAC) legislator Marvin Rojas filed a formal complaint with the Chief Prosecutor s Office accusing Martín and MOPT minister Karla González of not fining Alterra nearly $40 million for work delays that violate the contract.

Alterra has finished only a quarter of the improvements it should have completed under the contract, Martín admitted. But she called Rojas accusation absolutely false and said MOPT can t legally fine Alterra until the contract dispute is resolved.

We all know the relationship between the administration and Alterra, Rojas said in a press conference at the Legislative Assembly Dec. 14. According to documents from the Supreme Elections Tribunal (TSE), the law firm Feinzaig, Scharf & Van der Putten contributed $15,000 to the National Liberation Party during President Oscar Arias campaign. Alterra Director Nagel is listed on the firm s Web site as a lawyer.

Nagel, who became Alterra s executive director in 2004, said she knew nothing about the law firm s donation. She added the firm has every right to make political donations.

I have no conflicts of interests with anyone in MOPT. I met Martín a few months ago and I have known (González) for a longer time, like I know practically the entire Cabinet of President Arias, she told The Tico Times by e-mail.



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