Asunción light rail project hits snag after South Korean deal falls through

The Korea Overseas Infrastructure & Urban Development Corporation (KIND) will no longer be part of a US$600 million light rail project in Paraguay’s capital Asunción.

The decision came after the Paraguayan counterpart decided to back off from an implementation deal over design disagreements. 

In late June, KIND proposed a change to the 43km line so that it would connect Asunción with the neighboring city of Luque, instead of the originally planned Asunción-Ypacaraí stretch.

“Due to this uncertainty, we decided to end the negotiations there,” the head of state-owned rail firm Fepasa, Facundo Salinas, said at a press conference.

The change proposed by KIND would have entailed a much shorter line.

Under the original deal, KIND would have participated in the construction phase under a sub-concession contract awarded by Fepasa, and would have been responsible for achieving financial closure, according to a bill passed specifically for the project.

Fepasa is now preparing a new contract for both the construction and a 30-year operation period, a source from the operator told BNamericas under condition of anonymity.

Because the conditions of the project were previously established via legislation, a new bill will have to be passed. In this regard, Salinas said it will be submitted to congress at the end of this month. 

Salinas also told local outlet ABC Color that the government would cover between 20% and 30% of the project, and that a survey looking into interest among potential financiers had showed good results.

The line is part of the government’s 2023-2028 infrastructure plan, which involves US$5.5 billion in roads, rails, hospitals, schools, waterworks, flood control works, and housing projects.

CRITICISM

Following the news about KIND, senator Rafael Filizzola criticized the project, saying it was a repetition of the failed Asunción Metrobus corridor, which was rescinded amid delays related to land expropriations. 

“There never was any economic feasibility plan,” he told TV station NYP. 

Meanwhile, former Fepasa president Lauro Ramírez questioned the country’s technical capacity to carry out larger infrastructure projects. 

“Paraguay didn’t even evolve to diesel technology. We don’t have people who understand how a modern train works,” he told Radio Ñanduti. Ramírez also expressed doubts regarding the country’s capacity to finance the project.