San José, Costa Rica, since 1956

Airport Contractor Handed 60 Days Warning

This time they mean it: The government has given Alterra 60 days to get its act together or lose its contract to administer JuanSantamaríaInternationalAirport.

The new deadline comes after a failed  attempt by the Central American Bank for Economic Integration (CABEI) to take over the financing of the project from a group of banks led by the International Finance Corporation (IFC).

If Alterra gets the boot, the Costa Rican government would take over the operation of the airport and the half-finished airport expansion, said Viviana Martín, vice minister of the Ministry of Public Works and Transport (MOPT) and head of the Technical Council of the Civil Aviation Authority.

“We are in the final phase” of rescinding Alterra’s contract,Martín said. The hang-up in the conflict remains the financing of a beleaguered airport expansion project that has been delayed for four years thanks to a contract dispute between Alterra and the government.

Alterra – a wholly owned subsidiary of Bechtel Corp. – has said it cannot move forward with construction until it gets proper funding. Banks, meanwhile, have said they cannot provide the funding until the government and Alterra settle the contract dispute in a way that guarantees Alterra will be able to pay back the loan.

For the last few months, the government had been negotiating directly with the IFC to decide Alterra’s fate, but negotiations have fallen through and now ceased, said Transport Minister Karla González.

The proposal of the CABEI was to purchase Alterra’s $90 million in debt from the IFC at a discount and take over the financing of the project.

“We thought it gave an interesting solution to the creditors, but we did not receive a positive response,” said Alfredo Ortuño, the bank’s representative in Costa Rica.

Now with the banks out of the picture, the spotlight is on Alterra. It seems that what Alterra must do to keep the contract is restart the construction that Martín said has been “abandoned,” which would include completing new immigration, check-in and boarding areas.

Absent a resolution of the contract dispute, however, that seems unlikely, since the banks will not lend Alterra the money to finish construction until they are sure they will get their money back.

Alterra issued a statement saying that the part of the airport expansion completed in December was carried out with the company’s own money. It criticized the government for “noncompliance” with the contract in going five years without approving increases of fees charged to airlines – money that Alterra uses in part to pay back the banks.

Martín said the government has signed an agreement with International Civil Aviation Organization, a United Nations agency, to get help administering the airport should Alterra not meet its 60-day deadline.

MOPT has hired six international experts to audit Juan Santamaría. Martín said that if Alterra misses its deadline, there would be a “transition period” of an undetermined amount of time during which Alterra would hand over control.

Another option, González said, would be for a private third party to step in and take over the airport administration concession and the expansion project.

MOPT has given Alterra deadlines before, although Martín said this is the first time Alterra has been given a deadline to fix its non-compliance or lose the contract.


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