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Chile’s public works ministry to support inflation-hit construction firms

Bnamericas Published: Monday, May 30, 2022
Chile’s public works ministry to support inflation-hit construction firms

Chile’s public works ministry (MOP) is looking to provide support and certainty to construction firms grappling with high inflation and skyrocketing prices for inputs.

But subsidies are not planned, according to public works minister Juan Carlos García. 

Subsidizing construction material prices “ultimately doesn’t end in major impacts for works. What we need here is joint cooperation between the public works ministry, the construction chamber [CChC] and all actors to find sustainable solutions knowing that this isn’t a situation that will be solved within this year,” García said during the presentation of CChC’s infrastructure report.

The chamber previously said prices in the sector have increased faster than overall inflation, which would lead to less investment this year.

García admitted that some firms with public works contracts are facing difficulties, and that the ministry will focus on preventing work stoppages, even if costs have to be reevaluated. 

“There’s nothing worse for the country than when a project stops, because resuming it can take a year or longer, and the impact it has on the populace and the company is enormous,” he said. 

CChC REPORT

This year’s CChC infrastructure report found that Chile needs to invest US$178bn in infrastructure, energy and telecommunications by 2031 to achieve a sustainable development model.

The previous report, released in 2018, mentioned investment needs of US$174bn between 2018 and 2027, although the chamber said pressure to materialize investments has grown since then. 

Of the total investments, 60% would come from private sources or autonomous state firms such as EFE and Metro de Santiago, underscoring the relevance of public-private partnerships. 

Per sector, US$12.3bn are needed for water infrastructure, US$11.5bn for energy, US$27.8bn for telecommunications, US$28bn for interurban mobility, US$54.9bn for urban mobility, US$2.3bn for airports, and US$4.2bn for ports.

Also, US$4.5bn should go to rail infrastructure, US$1.6bn to logistics, US$12bn to hospitals, US$1.5bn to penitentiaries, and US$15.1bn to schools. 

The full report can be seen here, in Spanish.

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