Airport Contract Remains in Limbo

June 8, 2007

The status of the contract to manage Costa Rica’s largest airport remains in limbo after financers declared that conditions set by the Costa Rican government are untenable.

The International Finance Corporation (IFC), a private arm of the World Bank that had headed up the financing of private airport manager Alterra Partners’ expansions of the JuanSantamaríaInternationalAirport west of San José, sent a letter to the Technical Council of the Civil Aviation Authority (CETAC) as the government-set deadline expired Monday.

The letter rejects all five of the conditions CETAC said must be met for Alterra’s continued administration of the airport.

The Ministry of Public Works and Transport (MOPT) – which oversees CETAC – called a press conference Tuesday afternoon, but canceled it at the last minute, and has issued no statement yet as to what it plans to do next.

Representatives of the IFC this week traveled to San José, and neither side of the dispute will issue comments while negotiations are ongoing.

The dispute goes back to 2001, when Alterra, a subsidiary of British company Bechtel and the company holding the contract to administer the airport, negotiated a contract addendum that would allow it to collect more fees to help pay for airport renovations.

But the Comptroller General’s Office issued a scathing report in 2003 that called the new fee structure into question (TT, March 23, 2003). The dispute has continued ever since, with construction on the new airport terminal halting in 2005 (TT, June 10, 2005), but then starting again last December (TT, Dec. 22, 2006).

The position of the IFC and its partner banks is that unless Alterra gets a larger slice of the airport management pie, it will be in a financially risky position. Therefore, the IFC would pull its financing from the project, and the government would have to take over operating the airport or find another group to do it.

Critics have said Alterra should be fined for contract violations (TT, Dec. 22, 2006), and that the 2001 addendum that started the dispute was never valid.

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