Bidder could make US$400mn on Paraguay highway expansions

Wednesday, September 21, 2016

Based on estimates of investments and income flows involved in the the expansion of the ruta 2 and 7 highways, one of the most important PPP contracts in Paraguay, it is estimated that more than US$400mn will be made by the sole consortium bidding for the 30-year concession, should it win the tender.

The estimates imply that the consortium would make almost the same amount it will invest in executing the project, based on sources from the ministry of public works and communications' (MOPC) evaluation committee, reported local newspaper Última Hora.

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In the tender, the Sacyr-Mota Engil-Ocho A consortium made the only bid for the contract, including the design, finance, construction, maintenance and operation of the 149km stretch of four-lane highway between Ypacarai in Central department and Pastoreo in Caaguazú.

Investments in the project were estimated at US$450mn, with an additional US$80mn required for expropriation. The sole bidder has been reported as proposing investments of US$816mn over 15 years and US$747mn in maintenance throughout the 30-year contract.

On August 25, the technical bid made by the consortium was accepted by the evaluation committee, scoring 83 points out of 100.

According to the feasibility study, only 64% of the project is self-sustainable; that is, to be paid for by the tolls and taxes generated, which reach close to US$1.1bn.

Once complete, the financial model for the expansion project outlines that tolls will double from the current cost in Ypacaraí and Coronel Oviedo.

The tender for the works is expected to be awarded by the end of this month.

Meanwhile, Portugal's Mota-Engil has been awarded a contract to build stretches No. 2 and No. 3 of the bus rapid transit (BRT) system in Paraguay's capital Asunción, known as Metrobús.


On a separate note, Paraguay's MOPC has said that 7,300 direct jobs will be created during the construction of key works in the country, including the ruta 2 and 7 roads, the expansion of the Silvio Pettirossi airport for US$150mn, and the reconstruction of the Transchaco route for US$480mn.