Chile Infrastruture Report Q3 2008

The main road works in Chile will be Santiago's new urban highway, Vespucio Oriente, with the tender expected to happen in the second half of 2008. The 13.2km highway is the last section of the city's Vespucio beltway. It will include the construction of a number of underground tunnels for traffic flow as well. It will require a US$950 investment, according to the Public Works Ministry.

Airport expansion is expected to continue to increase to meet growing passenger demand. In April 2008, the Chilean Public Works ministry announced that among the projects to be launched for tender that year were the construction of a US$100mn airport in region IX and the Punta Arena airport with a US$150mn investment.

In the utilities sector, large companies are looking to secure their power supplies against Chile's fluctuating power grid. Corporacin Nacional del Cobre (Codelco), the Chilean state-owned copper company, is taking steps to secure the power supply to its mining operations by planning a US$1.7bn electricity plant, it was reported in June 2008. Chile is facing power shortages, with demand forecast to overtake supply in 2008. This is causing worries in Chile's power hungry mining sector and could lead to other mining companies following Codelco's example and developing their own power facilities.

Housing construction and general building are also showing signs of growth, with several major residential and commercial projects proposed. The largest of these comprises a project to build up to 15,000 new homes in the Santiago area of Pudahuel over the next 15 years, at an estimated cost of US$750mn. Private-sector contractor Las Lilas had submitted a proposal for this major project to the government.

BMI forecasts that Chile's construction industry value will rise by an annual average of 3.8% during 2008-2012, from a total value of US$12.4bn in 2008 to US$17.2bn in 2012. In 2008, we expect the sector to experience growth of 3.3%. This represents a decline in growth in the sector, from the rapid pace experienced in previous years (15% in 2005, 10.6% in 2006 and 4.2% in 2007). The deceleration marks a return toward the growth rate of the economy as a whole.