Future of Valparaiso Terminal 2 at risk
Terminal Cerros de Valparaiso’s (TCVAL) decision to quit the Port of Valparaiso’s Terminal 2 project will set the initiative back by years and slow the expansion of port capacity in Chile, according to recent analysis.
Following the decision, Terminal 2 will remain under concession to TCVAL until 2021, when it will return to the Chilean government. The government will need to decide whether to re-tender the project, make significant changes, or abandon the planned expansion altogether, adding years to the realisation of the project, if it goes ahead at all, explained Fitch Solutions.
The macro intelligence company said: “TCVAL’s decision to exit the Terminal 2 concession poses risks to the realisation of the project and will slow the expansion of port capacity in Chile.”
Involving a total investment of USD500bn, the project aims modernise and expand the Terminal 2 port facility with a new container terminal with capacity to operate with New Panamax ships, doubling the port’s annual cargo transfer capacity to 1,000,000 twenty-foot equivalent units (TEUs).
“The project was the largest port expansion under contract in the country and a key project for adding much needed port capacity in Chile’s Valparaiso and Santiago regions where around half of the country’s population is concentrated. Without it, there will be greater risk of bottlenecks at the country’s existing port facilities, threatening trade activity and the competitiveness of the country’s ports, said Fitch Solutions.
Construction on the project, awarded to TCVAL in 2013, had not yet begun due to delays in the environmental approval process. This is believed to be a key reason behind the early termination of the 30-year port concession contract and highlights the risks of awarding a project without required approvals already in place, said Fitch Solutions.
The Chilean government has vowed to keep the project alive, according to Business News Americas.
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