Chile Infrastructure Report Q1 2009

Chile has a developed and efficient infrastructure network in recent years, which has benefited from the government's export-driven development strategy. The country's physical infrastructure has improved substantially since the adoption of build-operate-transfer (BOT) concessions that allow the active participation of the private sector.

The prospect of operating a planned US$400mn terminal at Chile's San Antonio Port could see two of the world's largest port operators, DP World and Hutchinson Port Holdings (HPH), face off against one other as both try to increase their Latin American portfolios. Business News Americas quotes an unnamed official (November 2008) from San Antonio Port administrator Empresa Portuaria San Antonio (Epsa) as stating that both the Hong Kong-based HPH and UAE-based DP World had expressed an interest in the concession to operate and develop the terminal. The tender for the concession is currently being assessed by Chile's anti-trust tribunal, the TDLC, and is expected to be awarded in Q309.

Meanwhile, the public works minister for Chile, Sergio Bitar and the French ambassador for Chile, Maryse Bossire, have signed an agreement for airport development in Chile. The move reflects growing passenger air traffic in Chile which has resulted in a need to expand capacity existing airports. The agreement is for the French government, along with French airport operator, Aroport de Paris, to provide technical and financial support and assistance for airport studies in Chile for 2009. One of the key airports which will benefit from the agreements is the Arturo Merino Bentez International Airport which serves Santiago, Chile's capital city.

In December 2008, Chile decided to re-establish a railway line to Bolivia in order to provide the landlocked country with a cargo route to the sea. The 206km of railroad will be restored from the Port of Arica on the Chilean coast to the Bolivian border. The construction work is scheduled to be completed by September 2010 and will involve investment of around US$23mn.BMI forecasts that Chile's construction industry value will rise by a compound annual growth rate of 12.6% during 2008-2013, from a total value of US$12.4bn in 2008 to US$22.4bnbn in 2013. In 2008, we expect the sector to experience growth of 10.65%. This represents a decline in growth in the sector, from the rapid pace experienced in previous years (18.5% in 2007, 16% in 2006 and 10% in 2005).

The biggest company news in Q109 is that, MPX, a division of Brazilian based EBX, has submitted an environmental impact study (EIS) for the development of a US$4.4bn, 2.4GW coal-fired Castilla power plant in Chile. The announcement follows concerns voiced by the World Bank over the growing proportion of coal and gas fired power plants in Latin America's power generating mix. The EIS was submitted by MPX's Chilean subsidiary, MPX Energa de Chile. The proposed plans are for the construction of a thermoelectric complex, a coal fired power plant consisting of six 350MW coal fired units, an electrical substation and a desalination plant with a capacity of 71,700m3 per day.