Cabei approves US$550mn loan for Costa Rica interurban train

The Central American Bank for Economic Integration (Cabei) approved a US$550mn loan for Costa Rica's US$1.5bn interurban light train that has been planned for 10 years.

Although the loan represents a step forward, lawmakers have yet to approve the project - and Costa Rica's pandemic-related economic crisis could impact lawmakers' votes.

Cabei executive president Dante Mossi told local press on Thursday that “these funds, if approved, go to this project. If not approved, they go to other priorities in other countries in the region. But it would be a missed opportunity because a lot of effort went into this issue.”

If approved, President Carlos Alvarado’s signature project will be tendered this year, works will start in 2022, and the first part of the 85km double-track line could be opened in 2025. The train, planned under a PPP model, will have five lines to connect 15 cantons and four provinces.

The tender winner will design the project and get up to five years to complete all works and start operations, the government said.

THE SCENARIO

Costa Rica’s legislative assembly received on May 4 a bill from the government to equip, build and operate the interurban train with the help of the Cabei loan.

The remaining US$1bn will be raised through international financing, the government said in a statement.

After a special commission has analyzed it, the bill will be put up for at least two debates.

Approval would guarantee the continuity of the only megaproject retaken by the current administration, even after Alvarado leaves office in 2022.

In his address to the nation, Alvarado said the interurban train was Costa Rica’s “biggest concession project” and would help lift the economy out of the COVID-19 crisis.

THE TRAIN

Cabei specified that funds can only be used for the train and should be allocated in line with construction progress.

The loan must be repaid within 25 years. It has a five-year grace period and no commitment commission. Repayments can start after 12 years, the development bank said, adding, “the government of Costa Rica will not have additional financial charges during project execution.”

Railway institute Incofer, which supervises the project, has completed the pre-feasibility, engineering and feasibility studies, as well as financial and environmental analyses. 

The train will run through the provinces of San José, Alajuela, Cartago and Heredia. Incofer does not plan expropriations as it can use state-owned rights-of-way.

Source: Incofer 

The train will serve 47 stations, 10 of which will connect to other transport like buses. Yet, only the Atlántico station will connect the three main stations.

Line No. 1 will be the longest, serving 16 stations, and run 27.4km between Paraíso and Atlántico stations.

While line No. 2 will cover the east and run 21.6km between Alajuela station and Atlántico, line No. 3 will cover the west and run 25.4km between the latter and Ciruelas station.

Line No. 4 and line No. 5 will be extensions of No. 2 and No. 3 and have a combined length of 10.5km, serving seven stations.

Source: Incofer

Incofer said the train will help save almost 2Mt of carbon emissions during the first 30 years of operation. It is expected to create 1,200 jobs during the construction stage and operation will generate 1,470 jobs.

Photo credit: Cabei