Cabei continues support for US$1.5bn Costa Rica light rail project

The Central American Bank for Economic Integration (Cabei) continues backing Costa Rica’s US$1.5bn interurban light train, even though controversy over the approval of its US$550mn loan has intensified.

The electric train is planned to link capital San José, and 15 cantons in Alajuela, Cartago and Heredia provinces. 

“Our position continues to be one of total support for the project,” the bank wrote in response to a query by BNamericas. Proof of its commitment for the 85km double-track line is that it obtained an additional credit line of US$271mn for the government two months ago, Cabei said.

“At the beginning of July, we obtained the participation of the Green Climate Fund (GCF) to improve the conditions of our credit, increasing the period to 40 years, with a 10-year grace period, with an interest close to 0%.”

The GCF loan, US$21mn of which are a donation, adds to Cabei’s loan that was confirmed in May 2020 to cover the public sector’s participation in the public-private partnership project. The rest should come from the concession winner that will design, construct, operate and equip the rail. 

Cabei’s credit can be repaid in 25 years, and has a grace period of 12 years.

But even though the country’s legislative assembly received the proposal to accept Cabei’s loan 16 months ago, approval seems unlikely during President Carlos Alvarado’s term, which ends in 2022. 

ALVARADO’S MOVE

To spur approval, Alvarado declared the electric train project of public interest via a decree on September 23, forcing a series of legal requirements and processes to move forward.  

But several legislators have rejected Alvarado’s move, saying there is still much to review and that public finances are not strong enough to support the credit. 

On Monday, railway institute Incofer launched the prequalification stage of the tender to finance, construct, operate, and maintain the interurban train. Interested participants have until November 24 to submit proposals, according to the tender call.

During this stage, the institute will review the interested participant’s experience, their financial status and other elements. A date for the actual tender has not been announced. 

Despite the uncertainty, Incofer has already received more than 900 inquiries from at least 36 companies, executive president Elizabeth Briceño told local news site La República on September 22. 

Asked about its involvement, Cabei said that the prequalification tender will be overseen entirely by Incofer. 

COMPTROLLER'S REPORT

Adding to the controversy, Costa Rica’s general comptroller (CGR) published on Monday a report highlighting five main flaws in the planning process.

Incofer received a copy of the report on September 22, CGR said. 

According to the comptroller, the preinvestment stages were not carried out successively and logically, communication with the public works ministry (MOPT) was poor, the demand analysis included inconsistencies, a study confirming financial feasibility is lacking, and several regulatory actions had to be taken during the planning stage. 

The 27.4km line No. 1 will serve 16 stations between Paraíso and Atlántico stations. 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 Atlántico 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.

A tender was planned last year to start construction in 2022, but new dates have not been released.