Investment in Terminal Pacifico project will help reactivate Costa Rica's economy

This Recope release was published using machine translation.

To get out of the difficult economic situation that Costa Rica is going through due to the fiscal problem and exacerbated by the health crisis, the country requires the development of public investment projects that generate direct and indirect employment in depressed areas such as the Pacific zone, as well as as economic chains for the rest of the country.

Investing $ 234 million in the Terminal Pacifica development project will help reactivate the country's economy, especially in the Puntarenas area, which has been characterized as a depressed region.

The Pacific Terminal project has been planned for many years in order to strengthen the National Fuel System; It will provide the country with another point of entry for additional fuel to Moín.

Since 2009, the detailed conceptualization of the same was carried out; and from then on the steps to obtain environmental viability, land and easements, inter-institutional coordination and pre-investment studies began that today allow us to have a solid and vital project for the country's energy security.

In addition to imports, the project includes the strategic storage of LP Gas, an essential product to ignite the economic reactivation of Costa Rica and on which hospitals depend for their kitchens, laundries and sterilization centers, as well as for medical and surgical equipment.

Use of LP Gas

RECOPE is responsible for 67% of the energy that Costa Ricans need to produce and live and LP Gas is the third sales product, with an annual growth that only between 2018 and 2019 was almost 7%.

The pandemic has generated the purchasing loss in Costa Ricans who have joined the consumption of LP Gas; In 2019, 710,000 households used this energy for cooking and as of today, that number has increased significantly according to what the Gas distribution companies report.

We must add households, small and medium industries and hotel companies and the food industry, which depend on this product for their development and the economic reactivation of the country.

RECOPE enjoys low levels of leverage and financial stability that places it in AAA and AA + categories according to the latest evaluation by Pacific Credit Rating (October 2020) and Fitch Ratingns (March 2021) respectively, which makes us the largest company to date. Central America and the Caribbean level.

These reasons make RECOPE an ideal company to carry out this type of infrastructure projects as it has done throughout its 58 years of existence, in which it has managed to consolidate the National Fuel System.

Success factors of Terminal Pacífico

The Terminal Pacífico Project has success factors that will ensure that its development is carried out within the established time, cost and quality.

Continuing the concentration of inventories in Moín does not solve the problem that LP Gas presents in its supply chain, since it is a product with a high risk of shortages, due to the vulnerability of the final distribution chain and, not ensuring the supply will impact immensely the national GDP, the daily life of a low-income residential sector and the small and medium industry, which do not have enough capital to be able to subsist on its substitute, electricity.

The project is supported by rigorous pre-investment studies, approved environmental studies and environmental feasibility, legal, economic and market studies, among others.

In addition, there are a series of studies to support the project that reduce uncertainty and risk, such as soil, bathymetric and topographic studies.

The Pacific Terminal is a country project, defined in the National Development Plan, therefore, it occurs within the framework of inter-institutional coordination with MOPT, INCOP, Municipalities, Coast Guard, among others, so that it is an articulated development of the country, which integrates any institution that in one way or another is involved in its development.

The tender poster has a precise chapter on acceptability, where the legal, financial, technical and management capacity of any company that wants to participate in the contest is evaluated, in addition to this, an evaluation of the experience is included so that the decision In the end, also consider the successful experience of those who pass the acceptability filter. In addition, a series of guarantees are established for the compliance, quality and correct operation of the project.

Guaranteed energy security

The Pacific Terminal project will strengthen the National Fuel System and will ensure the country's energy security, by providing the country with another fuel entry point on the Pacific coast, in addition to Moín in the Caribbean.

Due to the processes caused by climate change, added to phenomena such as El Niño, the reality is that the presence of extreme events and the superposition of these phenomena together is increasingly frequent: El Niño, extraordinary tides and waves or storms, according to studies carried out in the Caribbean area by experts on the subject.

Hurricanes occur intermittently and with greater intensity each year, which has led to establish the possible impacts of these phenomena and identify possible risks of the structures in the area (dock, bridges, schools, road, etc.), which indicate that the project of having two ports for the entry of fuels to the country, is increasingly imperative.

Added to these phenomena is the seismic deformation that originated after the 1991 earthquake, which started or accelerated erosion processes on the Caribbean coasts.

RECOPE by law must guarantee the supply of fuels, this can be done in several ways, in years ago the protection measure against shortages was through the construction of tanks and security storage, which allowed us to control situations that disabled imports and / or or distribution of fuels for longer periods, however, 30 years ago consumption was much lower and the inventories we had were enough to carry out this coverage, which forces us to continue adjusting the National Fuel System to the new realities of the country and future projections.

RECOPE must by obligation of the Law decide between building a safety inventory, which implies an investment of approximately US $ 145 million plus the cost of purchasing, importing and maintaining the product, to increase its inventories within the entire National Fuel System; or to build the Pacific Terminal, which is clearly cheaper and avoids the financial cost of running out of fuel, which would further aggravate the economic crisis, since only one day of gasoline shortages implies a loss on the GDP of Costa Rica of US $ 68 million; US $ 44 million in the case of diesel and US $ 44 million in LP Gas.