The Route 68 concession, joining Santiago with Valparaíso and Viña del Mar is an innovative example of a successful example of the large concession program which has been carried out by Chilean Government since the early 1990's. The project consists on the engineering, construction, upgrade, operation, and maintenance of the existing 109 km Ruta 68 toll road, which connects Santiago with the Port of Valparaiso and the Viña del Mar region in Chile. The total financing costs for the project was about US$ 427 million, of which about US$ 103 million was provided by sponsors ACS and Sacyr. The project used a least present value of revenue (LPVR) auction mechanism and was the first example in which urban highways were implemented with free-flow inter-operable toll charges with four different project companies. Under the scheme, the regulator fixes user fees and announces a discount rate, and the franchise is awarded to the firm that bids the least present value of toll revenue. The franchise ends when the present value of toll revenue is equal to the winning bid. The LPVR mechanism allows for fair compensation if parties wish to terminate the contract early. The concession started in August 1998 and has a maximum term of 300 months. The toll road was opened in 2001.
BUSINESS | CONSTRUCTION OBLIGATIONS | PRIVATE FUNDING | SERVICE DELIVERY | SOURCE OF REVENUE |
BUSINESS - Existing: Rutas del Pacifico entails the improvement of an existing toll road of 109 km between the capital Santiago and Valparaiso, plus the construction of a new 20 km road section (Troncal Sur) connecting several towns with the city of Viña del Mar. The project also includes the maintenance of existing Route 60 and construction of two 5km tunnels. The existing highway was built and maintained by the Chilean ministry of public works. Tolls were charged to users, therefore there was an existing demand and revenue stream derived from the project.
CONSTRUCTION OBLIGATIONS - Refurbish: The project company is responsible for the construction of a new 20 km section and auxiliary civil works; however, the main component is the overall expansion and improvement of the existing 109 km Santiago-Valparaiso highway.
PRIVATE FUNDING - Finance: The total financing costs for the project was about US$ 427 million of which about $103 million was provided by sponsors ACS Chile S.A. and Sacyr Chile S.A. As part of the financing, Rutas del Pacifico (SPV) issued bonds in local currency for about $ 75 million backstopped with an IADB guarantee.
SERVICE DELIVERY - User: The project company delivers services directly to the toll road users and is responsible for handling customer service.
SOURCE OF REVENUE - Fee: The project company obtains cash flows directly from the toll roads users, mainly from light vehicles (75%) in this particular case.