[China Co-Financing Fund] IDB administers $50 million loan from CHC for Infrastructure Transport Program (PIT)

Project narrative

On April 3, 2014, the Inter-American Development Bank (IDB) signed two loan contracts with the Government of Costa Rica to finance the Infrastructure Transport Program (PIT): a $400 million loan that IDB issued from its ordinary capital (Loan 3071/OC-CRA), and a $50 million loan from the People's Bank of China (loan 3072/CH-CR) via the China Co-Financing Fund for Latin America and the Caribbean (CHC). The $450 million of loan financing authorized by IDB was designed to cover the total project cost. The IDB approval date for the loan financing was November 13, 2013, and it refers to this project as ‘CR-L1032 : Infrastructure Transport Program (PIT)’. The CHC loan carries the following borrowing terms: a 24-year maturity, a 6.5 grace period, a 0.75% commitment (credit) fee, no management fee, and an annual interest rate of 3-month LIBOR plus a 0.07% funding margin (also known as the ‘Bank’s Cost of Funding’) and a 0.85% IDB lending spread. The Infrastructure Transport Program (PIT) seeks to repair or pave up to 110 kilometers of the national road network, widen 51 kilometers of roads from two to four lanes, and build or repair 19 bridges and nearly 400 meters of breakwater in ports. These measures are expected to help reduce vehicle operations by 7 percent and travel time by 28 percent. It is also intended to decrease vehicle operating costs and increased road and port safety. The PIT is part of the National Transportation Plan 2011-2035 (Plan Nacional de Transporte 2011-2035) to promote the improvement of infrastructures in Costa Rica. For a full list of other PIT infrastructure projects funded by the IDB ordinary capital loan, see pages 43-44 in Alcance Digital No. 67. In the framework of this project, all of the funds from the China Co-Financing Fund were specifically to be used for the Limonal-Barranca section of the Inter-American Highway (also referred to as Route 1/Ruta 1), along with 149.16 million USD of the IDB ordinary capital loan. The Limonal-Barranca section, 49.37 km, is being improved in order to facilitate the flow of trade between Costa Rica and the rest of the countries and regional economic integration. Work on this section includes adding expanding the road from two to four lanes, the reconstruction of the existing road, the rehabilitation and duplication of the 19 bridges located on the route and the construction of 6 interchanges or overpasses in the main intersections. It will also add safety elements (such as sidewalks, 14 pedestrian crossings, bicycle lanes, signaling and containment barriers), and environmental works such as slope stabilization and 39 wildlife crossings. The Ministry of Public Works and Transport (Ministerio de Obras Públicas y Transportes) is responsible for project implementation. On March 5, 2020, Route 1 Consortium (Consorcio Ruta 1), comprised of contractors Hernán Solís SR and Ingeniería Estrella, were awarded a contract for $182,578,060.79 to work on the Limonal-Barranca section and the La Angostura Route 17 section (reference number IDB-C503378-03/20), and were given a 30 month execution period. On August 28, 2020, a commencement order was issued for the Limonal-Barranca section. The 30 month execution period implies that the originally expected end date for construction was February 27, 2023. However, it was reported that the the actual felling of trees for the beginning of the project’s construction activities did not start until September 15, 2020; as of December 2020, only 0.045% physical progress had been made; and as of January 2021, only 8% of necessary land expropriations had been made. At the end of 2020, $15 million of the CHC loan had been disbursed. As of October 8, 2020, $170 million (37.78% of the total financing from the IDB ordinary capital and the Co-Financing Fund) had been disbursed. Then, on April 9, 2021, Ingenieria y Economia del Transporte SMEMP, SA (INECO) was awarded a consulting contract to work on the project. The contract (reference number IDB-C739801-05/21) lists the China Co-Financing Fund loan and the IDB ordinary capital loan as a source of financing.