Latin America: Argentina reveals economic offers for road PPPs

17 May 2018 - 02:51 pm UTC

Argentina on Thursday (17 May) opened economic offers from 10 domestic and international consortia for its first six highway PPPs. The projects have a combined capex of USD 8bn.

Javier Iguacel, head of Vialidad Nacional, told reporters that the roads agency would study the economic offers in coming weeks, and award contracts during June. The winners will be those offering the lowest cost to the government.

¨There are some bidders that submitted the lowest bids for more than one project so we will evaluate what is the best option for the state and then we will officially announce the winners,¨ he said. Iguacel said initial work on these PPPs is expected to begin in October.

Iguacel also said that participating consortiums had submitted initial guarantees for up to USD 300m, combined. 

¨We are very happy with the level of offers we received. Most of the offers are below the costs we had initially expected. We need to highlight that these companies as well as the banks and investment funds participating in these projects are trusting Argentina for the next 15 years,¨ he said.

The following chart contains the lowest economic offers:

 

Road Capex Lowest Bidder Bid Amount
Corridor A   USD 1.33bn Jose Cartellone Construcciones USD 994m
Corridor B USD 1.23bn Rovella Carranza S.A , JCR S.A, Mota-Engil Latin America B.V (Portugal) USD 827m
Corridor C USD 1.08bn Rovella Carranza S.A , JCR S.A, Mota-Engil Latin America B.V (Portugal) USD 701m
Corridor E USD 1.7bn Helport S.A, Panedile, Copasa (Spain) and Eleprint S.A USD 1.01bn
Corridor F USD 1.4bn Helport S.A, Panedile, Copasa (Spain) and Eleprint S.A USD 722m
Corridor South USD 1.2bn Rovella Carranza S.A , JCR S.A, Mota-Engil Latin America B.V (Portugal)  USD 699m

 

A representative of a European firm in one of the consortia told Inframation that some of the offers had been very low.

"I am not sure if they will be able to meet the costs," he said.

Recent tensions in the foreign exchange market, which resulted in a sharp devaluation of the local currency, would not have any impact on these projects, he said.

¨We are not worried at all about this," he said. "We need to take into account that these contracts will last for 15 years.¨

The winners will have one year to reach financial close, Iguacel said.

Some of the bidders had already secured full financing for the projects. Bidders must submit a financial close guarantee and have one year to secure financing.

A representative of an Argentine construction firm told Inframation that the government’s proposed contract contains balanced cost forecasts, which will help companies overcome any substantial alterations.

“The proposed PPP contracts include mechanisms to compensate for the country risk variation until the financial close date," he said.

After this initial PPP process, the government plans to launch by July an additional six road projects requiring nearly USD 5bn in investment. Iguacel confirmed that these projects would be awarded in September or October.

On 24 April, seven international companies and 19 local companies bid for all or part of the first six corridors. In total, the government received 32 bids. Each consortium may win up to two projects. The repayment period will take place in 2022-2033.

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