Chacao bridge construction could face massive delay

The Chacao bridge being built in Chile's southern Lagos region (X) has encountered difficulties in the early construction stage, with certain works delayed by as much as 10 months. Information detailing the slow start to Chacao was provided through local officials, sources affiliated with the project, and statements from the country's road directorate Vialidad (under the administration of the public works ministry) through a public records request, local newspaper La Tercera reported.

According to the project schedule set forth by project builder Consorcio Puente Chacao, foundation works for the bridge's south pillar were due to begin in 3Q15, although signs now point to the works commencing in 2Q16.

Moreover, the works ministry has yet to give approval for the bridge's final engineering designs as submitted by Puente Chacao last August, This delay is attributed to the complexity of the engineering specifics for a project of this scale, and technical and administrative requirements, among other difficulties.

Among the most severe ailments to the project is Brazil's OAS, who holds 49% stake in Puente Chacao, as the company's involvement in the Lava Jato corruption scandal has limited its ability to participate.

OAS was considered a key link between South Korea's Hyundai (who holds the remaining 51% in Puente Chacao) and the Chilean government, given the Brazilian company's regional familiarity.

Hyundai has had to assume full administration of the project, which implies the South Korean firm would have to take on greater financial responsibilities over the first years of construction, which has generated "much economic stress," the daily said.

Should OAS be forced to exit the project, Hyundai could opt to seek a partner or assume full-responsibility, either of which would require changes to documentation and warranties that Hyundai and OAS have already made.

Warranties made by OAS total 749,080 UF (inflation-indexed units, equivalent to US$28.5mn) and Hyundai's 779,404 UF (US$29.6mn).

Once completed Chacao will be Latin America's longest suspension bridge at 2.6km, linking the island of Chiloé and the Llanquihue province on Chile's mainland.

Required investment in the project is estimated at 360bn pesos, approximately US$700mn at the time of contract awarding in February 2014.

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