China Eximbank provides $296 million buyer's credit loan for the Route 32 Renovation Project (Linked to Record ID#39847)

Project narrative

On June 3, 2013, the Export-Import Bank of China and the Government of Costa Rica signed two financing agreements worth $396 million for the Rehabilitation and Extension of National Route N° 32 Cross Section Route 4-Limón. The Costa Rican Government approved these financing agreements on March 10, 2015, through Law N° 9293. The first agreement is a USD-denominated buyer's credit loan (ID# 1420202052013211015) worth $296 million (captured via Record ID#37364). The buyer's credit loan (BCL) carries the following borrowing terms: a 4% interest rate, a 0% default (penalty) interest rate, a maturity of 20 years, a 5-year grace period, a 0.25% commitment fee, and a 0.25% management fee. The second financing agreement is a government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. (2013) 30 TOTAL NO. (475) 1420203052013111013] worth RMB 628 million (as captured via Record ID#39847). The GCL carries the following terms: an interest rate of 2%, a default (penalty) interest rate of 0%, a maturity of 20 years, a 5-year grace period, a 0.25% commitment fee, and a 0.25% management fee. The borrower was expected to use the proceeds of the GCL and BCL to finance 85% of the cost of a $465,593,387.06 commercial (EPC) contract [CONAVI-CHEC-00] between Costa Rica's National Road Council [Consejo Nacional de Vialidad] (CONAVI) and China Harbour Engineering Company Ltd. (CHEC), which was signed on June 3, 2013. The purpose of the project is to expand a 107-kilometer section of National Route 32 from two to four lanes. This road section begins at the Route 4 junction at the Frío river and extends to Puerto Limón’s district center. National Route 32 connects San José with the port of Limón. 80% of Costa Rican exports and imports go through the ports of Moín and Limón, as it is the main connection with the ports of the eastern United States, Europe, and South America. CHEC is the EPC contractor responsible for project implementation. CONAVI issued an order to CHEC to commence work on November 20, 2017. The project was originally expected to take 42 months from the start date. However, it has faced a variety of delays related to land expropriation, tree cutting and clearing activities, environmental challenges, relocation of utilities, archaeological studies at five locations, and cultural and language barriers. The initial planned completion date was October 4, 2020. However, according to the Service order (O.S.-7) issued by CONAVI to CHEC on January 6, 2020, indicating that the new deadline for completion of the project was March 27, 2021. Another service order (O.S.-11) issued by CONAVI on February 25, 2021, indicated that the new deadline for completion of the project was May 22, 2022. As of March 2019, the project had achieved a 9% completion rate. On September 2, 2023, the second section of the Costa Rica Highway 32 project, totaling 20.6 kilometers, was delivered and opened to traffic. As of December 2024, 91.85% of the project has been completed, with a target completion date of May 28, 2025.