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20 years

Solis warns China he will not accept contract signed by Chinchilla government


April 28th, 2014 ( President-elect Luis Guillermo Solis is warning China that he will not accept the conditions of a $395 million loan agreement signed by the government of Laura Chinchilla with Beijing to expand Route 32 between Pococí and Limon when he takes power on May 8th.


Solis let his intentions be known during a meeting with Chinese Ambassador to Costa Rica, Song Yanbin, during a meeting on April 21st.


“We believe that [the project] must be done, we want [the project] completed as soon as possible, but not under the conditions of the current contract,” Solis said.


The agreement, which was signed in June 2013 during the visit of Chinese President Xi Jinping, has yet to be approved by the Legislative Assembly, where it faces opposition from Solis and the Citizen Action Party (PAC).  Academics and business groups have also criticized the agreement.


Under the agreement, which is supported by the Chinchilla administration and the National Liberation Party (PLN), China would provide a loan of $395 million to Costa Rica to expand Route 32 to four lanes between Pococí and Limon.


Costa Rica would be required to hire the builder China Harbour Engineering Company (CHEC) to take charge of the work, and to provide $70 million in additional financing.


PAC lawmakers contend that the total budget of $465 million was determined without any plans or designs, and that 25% of the budget is allocated for “unexpected expenses.”


Solis said that while renegotiation with China might be possible, it might also be possible to fund the expansion without China’s involvement.


“I think [renegotiation] could be possible, but I do not know as I have not spoken to the ambassador of that specific possibility.  It seems to me it is.  Moreover, I think there is a way to reshape the debate which could result in a contract that doesn’t involve China,” Solis said.


“You have to find the best conditions for the country and there are different ways to finance this road,” Solis added, noting that he doesn’t know if there is political will on the part of China to renegotiate the contract.  “Part of the problem is that they have signed contracts,” Solis said.


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  • Ken Morris

    Good for Solís. He’s starting off on the right foot and doing exactly what the people elected him to do. Enough of these careless sweetheart deals!

  • Derryl Hermanutz

    The government could fund the project with bond debt, then operate the road as a tollroad like Ruta 27, and secure the bonds with the tolls. These bonds would be good investments for the Caja and other institututional investors who invest and make their payouts in colones.

  • McDemon

    I like to see this! Good for him.

  • Marcel M. Pfister

    Pacta sunt servanda, said the Romans, and right they were. A signed agreement needs to be honored. It’s part and parcel of the credibility of a democratically elected government. Ensuring partners and investors of continuity beyond election dates is critical in attracting Foreign Direct Investments. It has, in the past, been one of Costa Rica’s fortes. I have no issue with Solis questioning the contents of the current contract or even asking for it to be renegotiated or cancelled. I suspect the “will not accept” headling is chosen by the journalist and in no way reflects of what was actually said.

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