Project Spotlight: Revamp of Honduras' San Lorenzo port

Located on Honduras' southern Pacific coast, in the Boca de Henecán bay, San Lorenzo is one of four ports operated by national port authority ENP.

The port lies along the Gulf of Fonseca, on which El Salvador and Nicaragua also have coastline. 

San Lorenzo currently receives general and bulk cargo, as well as lumber-carrying vessels.

With a 300m-long T-shape dock, the port is equipped with four storage facilities and a 1.6mn-gallon molasses tank, and has four berths. It also houses a 46,000m2 yard for the storage of machinery and equipment.

In terms of handling capacity, San Lorenzo ranks a distant second to Cortés, Honduras' main port. Last year, it moved 1.33Mt of cargo, well behind the 11.2Mt handled by Cortés. During 1Q18, the port moved 362,500t of cargo.

The port has certain limitations that have impacted its competitiveness, such as the fact that access is via a 32km canal, which prevents it from receiving larger vessels.

UPGRADE PROPOSAL

In April last year, a consortium comprising Terminal Portuaria Multipropósito de San Lorenzo and Estibadores y Reparaciones Industriales submitted an unsolicited proposal to public-private partnership agency Coalianza to modernize and expand the San Lorenzo terminal.

The consortium estimated investment in the project at US$65.1mn.

In line with Coalianza's rules, the proposal was submitted along with a US$3.2mn bond, or 5% of the total investment.

At an extraordinary meeting in September, Coalianza's commissioners agreed to admit the proposal for review, branding it a "project of public interest" because it requires investment exceeding US$50mn. The project was included in the national public investment system (SNIPH), which required the commission's executive secretariat to begin the relevant administrative procedures.

At the end of November, President Juan Orlando Hernández deemed the proposal a matter of national interest, and published the corresponding decree in the official gazette on December 27.

Under the country's public-private partnership law, the initiative was also declared a "mega-project" due to its required investment.

The decree authorized Coalianza to carry out any necessary procedures and/or paperwork to structure the project under an accelerated investment process. The move involved launching a selection process for a private investor.

SELECTION PROCESS

Last month, Coalianza issued a call for expressions of interest for the project. Both local and international companies were invited to submit documentation certifying that their experience matches that required to carry out the project.

Coalianza's invitation states that the project is aimed at transforming the existing port facilities to develop a regional port hub, promote job creation, and contribute to the comprehensive development of the region.

The requirements to submit expressions of interest are available on request.

According to the document, the objective of the project is to carry out improvements to increase handling capacity, as well as expand and diversify the port services offered on the Pacific side of Central America.

The upgraded port would also serve to increase container traffic, including local cargo that is handled at other ports in the region.

The investment would be focused on facilities to receive all kinds of cargo and turn San Lorenzo into a late-generation multi-purpose port, as well as upgrading the existing equipment.

The concession contract to operate the port would be for 30 years valid from the date the contract is published in the gazette. The contract would be awarded under a design-finance-build-operate-transfer model.

The equipment, facilities, machinery and vehicles that are currently managed by ENP at the port would also form part of the concession, as would the existing infrastructure and on-site installations. However, ownership of all land and property would remain with ENP.

Coalianza set the reference price for the contract at US$66mn.

The private partner is expected to recoup the investment from fees for port services.

Those interested in participating must submit an expression of interest letter, and post a US$3.3mn bond, which is valid for an initial six months but can be extended until the investor is selected.

The letters must be submitted in print no later than October 4.

RESTRICTED INFORMATION

According to Honduran regulations, the technical details and specifications of the project cannot be publicly disclosed, a Coalianza spokesperson told BNamericas. 

Details such as the tentative timetable to complete the works are available to those who register to participate and pay the corresponding US$10,000 fee.

To date, three expression of interest letters have been submitted, including the consortium that originally presented the proposal.  The names of the other bidders cannot yet be made public, according to the Coalianza official.

Coalianza is planning to promote the project to potential investors abroad, the source added.