The Government of Chile has confirmed that it nullifies the provisional award to the Seville group Azvi of the contracts for the Public Transport Corridors Route 160 and Route 150, as well as the Concepción-Talcahuano highway, a package of projects valued at more than 400 million dollars (343 million euros).
President José Antonio Kast has invoked "budgetary reasons" to explain to the authorities of the Biobío region the decision to reverse the concession, which had been granted to Azvi a few months ago.
The contracts provided for a concession period of 20 years, with investments funded through a availability payment scheme, and already had the approval of the competent technical bodies.
Despite Azvi sending a letter to the Ministry of Public Works proposing to reduce the scope of the concession and cut construction costs by 20% without altering the committed deadlines, the Chilean Executive has chosen not to accept this alternative.
Finally, and although Kast came to power with a market-friendly and deregulation message, the Government will execute these highways with funding from the national budgets.
Concern among Spanish infrastructure companies
Spanish companies with interests in the country, including Sacyr, OHLA, Abertis, or Grupo San José, fear, according to "Expansión," that this radical change responds to the fact that the projects were promoted by the previous socialist Executive of Gabriel Boric.
Sources from the sector warn that this turn could translate into delays of up to four years and an increase in financial risk for public accounts, in a context where it is intended to contain the fiscal deficit.
Risks to Chile's investor reputation
The Coordenadas Institute for Governance and Applied Economics warned on August 19 that the reputational impact for Chile could erode its attractiveness for foreign investment in the coming years.
"The problem is not the 400 million suspended, but the precedent. There is a 'stock' of more than twenty initiatives worth over 10 billion dollars [8.574 billion euros] already awarded that have not started either rethinking or works, and a portfolio to be tendered for 2026-2027 of 22 processes for 8.016 billion [6.873 billion euros]," it explained in a report.
According to the official employment ratios of the Ministry of Public Works itself, this paralyzed portfolio amounts to about 95,000 jobs in the air. If the 1.5 multiplier from the Chilean Chamber of Construction is applied, around 12 billion dollars (10.288 billion euros) of economic activity would have been frozen.
"Chile has ahead an infrastructure gap of 250 billion dollars [214.343 billion euros] that it will not be able to close without private capital. And private capital has an irrational risk aversion," summarized the executive vice president of the Institute, Jesús Sánchez Lambás.