2024 Chile Infrastructure – Tender Outlook

Chile has been very successful over the years with its public-private concessions system which helped improve infrastructure across the country. The countries competitive ranking increased dramatically during the 2000’s as highways, roads, and ports were upgraded.

For 2022, the  President at the time, Piñera, left office with a plan that involved tendering 12 contracts with total investments of US$4.2 billion.  Unfortunately, when the new president, Gabriel Boric took office in March 2022, the government did not launch any new tenders, only opening bids for contracts that were already auctioned by the previous administration.

This year there were plans to reactivate the infrastructure market by tendering US$3.9bn in projects.  Concessions would have included mobility projects such as cable cars and light rails, alongside highways and airports. You can see our previous post here that outlines the portfolio.  

At this point in the year, the government has only launched only a handful of tenders. One for a US$523mn highway project and the other to conduct preparatory studies for a proposed US$1.3bn rail link between Santiago and Valparaíso. The tenders for the northern access to Concepción (US$564mn) and the Santiago-Los Vilos stretch of route 5 (US$1.3bn) are expected to be awarded during the first half of next year. 

Industry players and organizations are complaining about the lack of new tenders and wait times. They long tender periods and permitting processes are delaying the concessions schedule. Archeological findings at construction sites have also stopped projects with delays not received in a timely manner that authorizes works to continue.

2024 Concessions Schedule

• Re-tender of route 57 Santiago-Colina-Los Andes (US$442mn) – The project involves a new concession period  on a section of Route 57 which contemplates the expansion to double lane or to third lanes in some sectors. The project will improve the connectivity between the mountains and the coast for commercial traffic.
• Re-tender of route 5 Collipulli-Temuco (US$234mn) – The project involves a new concession period for maintaining, operating, and carrying out works on a section of the Panamerican highway that covers approx.. 144km between the cities of Collupulli and Temuco.
• Re-tender of route 5 Río Bueno-Puerto Montt (US$193mn) – The project involves a new concession period for a section of the route 5 highway.
• Alto Hospicio-Iquique cable car (US$108mn) – The project includes the construction and operation of a cable car that will link the cities of Iquique and Alto Hospicio. Aimed at alleviating traffic congestion between the cities and cutting travel time between the two cities to 16 minutes.
• US$398mn Airport Light Rail – The project includes the construction of a 12km light rail to connect the international airport with Santiago. The initiative will connect the Santiago subway system with the airport
• Viña del Mar-Reñaca light rail line (US$203mn) – The project consists of building a tramway between the downtown of Viña del Mar and the city of Reñaca. It will provide another option for travel between the two cities which is often congested.
• Coquimbo-La Serena light rail line (US$313mn) –  The project involves providing a railway service between the cities of Coquimbo and La Serena, making use of existing infrastructure. Work involves the rehabilitation and upgrade of the existing line. In addition, the train would provide services 24 hours a day.
• Re-tender of Parque O’Higgins stadium (US$29mn) – The project involves incorporate improvements in the infrastructure and equipment of the Parque O’Higgins Stadium to hold larger events. The venue hosts 12,000 spectators.
• US$398mn Airport Light Rail – The project includes the construction of a 12km light rail to connect the international airport with Santiago. The initiative will connect the Santiago subway system with the airport
• Tsunami alert system (US$94mn) – The project consists of the construction and implementation of a warning and notification system for possible tsunami risks and evacuation processes based on a network of audible and visual alarm stations, which includes a redundant communication system and control centers at a regional and regional level. central.
• Valparaíso access road system (US$616mn) – The project consists of a 48km ring road corridor between Valparaíso and Concón.
• Santiago northwest orbital road (US$446mn) – The project consists of building a 46km  highway that will connect the capital’s north-east access with the Santiago – San Antonio highway.
• Southern airport network (US$273mn. Includes El Tepual, Cañal Bajo, Mocopulli and Pichoy airports) – The project will includes the concession of the El Tepual de Puerto Montt, Cañal Bajo de Osorno, Pichoy de Valdivia and Mocopulli de Chiloé airports, The initiative seeks to expand the capacity of these facilities.

Rail Tenders

Rail is a major focus and is one of the more exciting parts of Chile’s infrastructure agenda. In September 2019, President Sebastián Piñera announced the US$5 billion “Chile on Rails” program, which is destined to be the countries largest ever railway investment. The program consists of 25 projects and over 1,000 kilometers of railways that will triple the number of users to 150 million by 2027 and double cargo capacity to 21 million tons.

• US$1.5bn Santiago-Melipilla Rail Project – The project calls for the development of commuter and cargo rail lines between Santiago and the Melipilla’s district. There is a possibility of extending the cargo line to the port city of San Antonio. The new line will reduce travel time between Santiago and Melipilla to an estimated 45min with trains expected to travel at speeds up to 120km/h. The line is forecasted to move 31mn passengers/y. For 2023, seven civil works and rail line contracts will be awarded. Some of the works are already underway, including new bridges and underpasses, as well as several stations. 
• US$705mn Santiago-Batuco Rail Link – The project include the construction of a 27km rail line that will run north from the capital and include eight stations to Batuco. Part of the line will be underground involving building a tunnel at a depth of 27m. The project could help turn the western sector of Santiago into a commercial hub, serving an estimated 35mn passengers a year and decreasing travel times to 20 minutes.   
• US$398mn Airport Light Rail – The project includes the construction of a 12km light rail to connect the international airport with Santiago. The initiative will connect the Santiago subway system with the airport.
• US$313mn La Serena-Coquimbo Light Rail – The project involves providing a railway service between the cities of Coquimbo and La Serena, making use of existing infrastructure. Work involves the rehabilitation and upgrade of the existing line. In addition, the train would provide services 24 hours a day and fares would be similar to that charged by existing public transport providers.
• US$78mn Valparaiso Cable Car – The project calls for building a cable car public transport system with capacity for 3,000 passengers in each direction per hour. It is expected to improve connectivity in Valparaíso with the majority residents located in the hills above the city.
• US$197mn Extension to line No. 6 – The project consists of extending the Line 6 another 2.6km which was recently opened in 2017. The goal is to connect with the future Santiago-Melipilla rail service that is to be built.

Conclusion

Chile has a healthy infrastructure pipeline that will provide opportunity for foreign investors and companies. Beyond tendering as a concessionaire, there are opportunities for engineering services, construction, services, products, and anything else that would be required for large infrastructure projects.

Although 2022 and 2023  have been slow for new new tenders, it may have been a positive development since inflation in materials over the last 12 months has become an issue for the construction industry in general. Aside from high inflation, Chile’s construction sector has also been dealing with long delays in permitting processes, involving social and environmental evaluations. 

For 2024, the governments budget would increase the money allocated to the concessions office for staff expenses by 11.2%, as it aims to hire additional personnel for project preparation and inspection.  The goal is for the concessions office to be better prepared in the pre-investment stages of projects, so it will be feasible to execute it within the planned timetable and costs. 

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