El Salvador opens cargo airport PPP

El Salvador opens cargo airport PPP

Project & Infrastructure Finance El Salvador Central America

El Salvador has started the process to auction a public-private partnership (PPP) for a cargo terminal at the international airport in San Salvador.

Officials from El Salvador's investment promotion agency Proesa will go on a roadshow on October 14 to Mexico, Costa Rica, Guatemala and Panama, before heading on to Chile, Colombia and Peru at the end of the month, José Schafik Collazo Hándal, the director of PPPs at Proesa, told LatinFinance.

Proesa is selling access to the data room and the auction rules for $1,500. The deadline to submit technical bids is February 12, 2020. Proesa plans to announce the winner on March 12, the same day that the financial offers are due, Collazo said.

The agency expects Congress to approve the project plans within three months. The cargo terminal will be the first contract granted under the PPP law enacted in 2014, he added.

In the first phase of the PPP, the project sponsor has 15 years to double the handling capacity at the cargo terminal to 52,000 tonnes per year. The next 20-year phase kicks in after the handling capacity reaches 46,000 tonnes and calls for increasing capacity to 73,000 tonnes per year.

The first phase requires $11.8m in investments, while the second phase needs $43.8m. Bidders are expected to present letters of intent from lenders that cover roughly 70% of the costs, Collazo said.

"All the ingredients are there for the concessionaire to be able to trigger the extension. As long as the concessionaire has deals with courier companies, their business should be in good shape," he said. "The El Salvador airport has some of the lowest costs in cargo charges and tariffs in Latin America. In addition, El Salvador is also a dollarized economy with low inflation."

Along with the cargo terminal PPP, Proesa also plans to procure a 15-year concession to install LED lightning and security cameras on 140km of highway in November, with bids due in May or June, Collazo said.

The $15m project permits the concessionaire to sell advertising along the route. Deloitte is Proesa's financial advisor on the street lighting concession, Collazo said.

Proesa has also undertaken pre-feasibility studies on El Salvador's first toll road concession to connect the port in Acajutla to the border with Guatemala for an estimated $80m in investments, Collazo said.

The agency is also working on more toll road concessions and a $16m government center in the near term, he said.

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