Airport Financiers Working to Avoid Loss of Airport Concession
The International Finance Corporation (IFC), the group that is financing the work being carried out at the Juan Santamaría (San José) international airport by Alterra Partners, is looking to find a way out of the impasse with Costa Rica's government regarding the concessions contract.

"IFC wants to avoid termination [of the contract], which would have serious repercussions for the airport and for future investments in Costa Rica," IFC said in a statement released to the press.

In 2001, IFC committed us$120 million - including us$85 million syndicated to 10 international banks in financing - to Alterra Partners Costa Rica to expand and modernize the Juan Santamaría Since then, us$90 million has been disbursed.

In 2003, an unexpected change in the tariff framework by the Contraloaria General de la Repúbkuca (Costa Rican comptroller general's office)  "changed the rules of the contract as previously agreed with the Ministerio de Obras Pública y Transportes (MPT)and the Consejo Técnico de Aviación Civil (CTAC) - civil aviation.

This forced a suspension of construction work at the airport and created an impasse among the government, Alterra Partners Costa Rica and the company's creditors," IFC said.

In May this year a six-member technical committee - consisting of two representatives from CTAC, two representatives from public management contract inspector OFGI and two representatives from IFC - deemed "feasible" and submitted to CTAC a proposal from IFC-led group of banks and Alterra Partners, according to past reports.

The proposal would extend Alterra's contract to operate at Juan Santamaría from 20 to 25 years and provide the company with a nine-year extension to pay off its us$90 million debt to IFC, pushing its repayment deadline back to 2024, from the original 2015.

However, despite the committee's approval of the restructuring proposal - which also includes us$45 million in additional funding from the Central American Bank for Economic Integration - "CTAC has proposed five further conditions to the proposal from IFC and Alterra Partners Costa Rica, but IFC does not consider these to be financially viable," the document read.

The CTAC's requirements included installation of new immigration facilities by December, Alterra's withdrawing its lawsuit against the government, a guarantee for financing of the pending works, a three-year extension only to the original concession contract and the elimination of a clause that established a us $9million limit to fines for stalled works.

Up until 2003, creditors had provided us$90 millon for the project, but decided to freeze funding in that year due to a lack of certainty as to the repayment of the debt and the changing of conditions by the government, according to past reports. In fact, IFC has been repaid only us$11 millon of the loan.

"Today there is an outstanding loan of us$79 millon, of which us$24 million is for IFC's own account, with the balance held by IFC's 10 participant banks,"  the IFC said.

Alterra claims to have lost us$18.7 million in revenue due to changes in how much it could charge in tariffs, raising doubts over whether it would have the necessary funds to pay back its loans and leading the company to initiate legal proceedings against the government.

But IFC insists on the possibility of reaching an agreement and continues to negotiate with Costa Rica's government.

 "IFC supports the rehabilitation of the airport because of the potential benefits to tourism, economic growth and social development in Costa Rica at a time of increased regional integration," it said.