Puerto de Gran Escala
The case for a new container terminal in central Chile

20

Discussion Paper 2013 • 20
Alexis Michea

Ministry of Transport andTelecommunications, ChilePuerto de Gran Escala (PGE)

Discussion Paper No. 2013-20

Prepared for the Roundtable on
Port Investment and Container Shipping Markets Roundtable(7-8 November 2013, Santiago, Chile)

Alexis MICHEA
Ministry of Transport and Telecommunications, Santiago, Chile

September 2013

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PUERTO DE GRAN ESCALA (PGE)

TABLE OF CONTENTS

1. Chilean ports overview ............................................................................ 3
2. Planning and development in the state ports sector .................................... 5
3. Towards a national ports plan .................................................................. 6
4. Puerto de Gran Escala (PGE) .................................................................... 7
5. Demand forecasting .............................................................................. 11
6. Balance between demand and capacity.................................................... 14
7. The need to advance rapidly .................................................................. 15
8. Work so far .......................................................................................... 17
9. PGE profile ........................................................................................... 17
10. Work in 2013 and beyond .................................................................... 18

1. Chilean ports overview
Currently, there are 56 ports in Chile. They can be grouped in three categories:

10 state-owned, public use ports, distributed along the entire coastline, from
Arica near the border with Perú to Puerto Natales and Punta Arenas in the vicinityof Cape Horn;

14 privately owned public use ports, with terminals developed by privatecompanies. These ports transfer containers as well as bulk cargos, and are locatedin the bays of Mejillones (north of the country), Quintero (center) and Concepción(center-south);

32 privately owned, private use ports. These are terminals developed by privatecompanies whose core business is not port operation (for example, coal power
plant operators) or developed by companies under contract to large freight
generators (for example, copper mines). Located in a variety of zones along thecoast.

Figure no.1 illustrates the geographic distribution of state-owned ports and the volume
and composition of freight handled.

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PERFORMANCE MEASUREMENT IN THE ROAD SECTOR: A CROSS-COUNTRY REVIEW

Figure 1. Freight transferred in Chilean state-owned ports (ton/yr)

Empresa
Portuaria
Talcahuano-San
VicenteEmpresa Portuaria
Arica

Empresa Portuaria
Iquique

Empresa
Portuaria
Puerto Montt

Empresa
Portuaria
Antofagasta

Empresa
Portuaria
Chacabuco

Empresa
Portuaria
Coquimbo
Fractional
Containerized
Bulk

Empresa
Portuaria
Valparaíso

Empresa
Portuaria
San Antonio
Empresa
Portuaria Austral

Source: Port Companies

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The state-owned sector was modernised in the late 1990s by means of Law 19 542,
which divided the large national ports company (Empresa Portuaria de Chile, Emporchi)
to create 10 independent port companies (Empresas Portuarias), each with its own boardof directors, management, etc. These independent companies have a mandate to ensure
efficient port operation and development whilst maintaining a sound financial status. The
Law establishes a regulatory framework for freight transfer operations to be carried out
by private companies, which can operate under two different regimes:‘Mono-operador’: a single concessionaire operates an entire terminal, and

‘Multi-operador’: multiple agencies operate within a terminal administered by therespective port company.

The Law also establishes a general rule under which new pier infrastructure can only
be developed by private companies and through public tendering. Only in the event of an
unsuccessful tender can the port company itself invest.
Some of the smaller ports operate without a terminal concession, entirely under themulti-operador regime. Currently, 7 out of the 10 public companies have concessioned
terminals under the ‘mono-operador’ regime, with at least two further companies
planning tenders for terminals within the next year or so. Several of the companies in thegroup of 7 are developing plans to concession second terminals within a similar
timeframe.
16 years after the reform of the public ports sector, the Chilean model is considereda largely successful experience, both because of the financial results that public andprivate companies involved have achieved, and because of the quality of the port
facilities, services and rates on offer.
2. Planning and development in the state ports sector
The Law also mandates that each company maintain an updated ‘Master Plan’ and‘Referential Investment Schedule’ for its continuous and timely development. These
instruments typically address issues such as expected demand levels in the respective
hinterlands, pier infrastructure and equipment needs. With few exceptions, issues
relating to the port’s connectivity and the impact of freight movement on theroad/railway network are not considered.
A case can be made for this to change. From an operational point of view, aterminal’s effective capacity is not only determined by the transport stages that occur
within the port boundaries, but also by those upstream: from port gate to linkroads,
through the urban road network in the host city, to long-haul trunk roads and railway
lines connecting the port with its clients. Efficient and sustainable development of theseparts of the freight transport system depends on integration with port development plans
and will benefit from engagement of the port companies in broader hinterland
development strategies. Contributing to integrated strategic planning will help guarantee
the long-term competitiveness of the terminals under their responsibility.
At a higher organisational level, the Law did not create a national ports authority but
gave the Ministry of Transport and Telecommunications (MTT) a central role inoverseeing, and in some cases powers to approve or reject, specific stages of the
independent planning, development and management processes of port companies.

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PERFORMANCE MEASUREMENT IN THE ROAD SECTOR: A CROSS-COUNTRY REVIEWExamples of the areas for such intervention are modifications to the physical area where
each company has legal responsibility for developing port facilities (known as ‘Recinto
Portuario’); emitting non-binding opinions on tendering conditions; and setting the boardof directors legally-binding yearly management goals (the ‘Planes de Gestión Anual’,PGAs).
Additionally, the Law sets the responsibility for MTT to propose ‘strategic plans’ forport development. Although the law does not specify exactly what such plans should
cover, the ministry has taken a view that they should address all the aspects thatindependent port authorities do not have the mandate or incentive to take onthemselves, for example with regard to coordination of plans for the long term
development of ports which share large portions of hinterland.
3. Towards a national ports plan
The case for integrated planning, the historical criticism levied at the ministry for its
abandonment of its infrastructure planning role in the freight sector in general, as well asother responsibilities that the Law establishes for MTT (e.g. safeguarding mutually
beneficial port-city relationships), has guided the ministry in its current drive fordeveloping a national-scale port planning instrument, the National Ports Development
Plan (PNDP, by its initials in spanish).
Work on the PNDP started in 2012, with the following objectives:
1. To complement the independent companies’ mid and long term planning: Harmonising company plans, and Including aspects which might so far have been omitted.
2. To ensure the preparation of investment plans for the port system in its entirety,
i.e. including: Road and railway solutions, as applicable, within port cities,
 Road and railway solutions, as applicable, to connect with each port’s
hinterland, and Logistics support infrastructure, intermodal exchanges, etc.
3. To ensure that state-owned ports play their role as key link in the development ofeach of the country’s regions to the full, catering for the needs of all relevant
economic sectors.
4. To ensure the progressive building of local consensus and thus continuity indevelopment plans, clearly identifying stakeholders and responsibilities inpushing forward such development.
The elaboration of the PNDP has been organised into three main stages:
Stage I: review and critical analysis of current port planning instruments, i.e. port
company Master Plans, with regard to four main aspects:
a. Demand forecasts for each freight type expected in the Region in the foreseeable
future;b. Port infrastructure necessary to meet such demand;

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c. Coastal space needed for future development; andd. Identification of road and rail needs.
Stage II: update and standardisation of long term demand forecasts, modelling of
freight distribution between ports with overlapping hinterlands, identification ofrequirements for coastal space reserves and sheltering works necessary for long term
development, and identification of the freight transfer needs that the state-owned portsystem might not be able to fulfil.
Stage III: public discussion of the Stage II proposals with regional and national
stakeholders and generation of the first formal version of the PNDP.
Stage I was completed in May 2013, with Stages II and III scheduled for the months ofOctober and December, respectively. The design of the PNDP foresees regular updates,
the first of which is due in December 2014; these updates should progressively broaden
the scope of the development issues covered, moving on from an infrastructure-oriented
effort to one which also comprises aspects such as the potential need for improvements
to the institutional framework.
Work on the PNDP is being carried out in conjunction with individual port companies
under the coordination of the ministry. MTT will also undertake specific components of
the analysis and liaise with other state organisations; this, for example, is the case oftrunk road analysis in the central region currently being carried out with the Ministry of
Public Works.
4. Puerto de Gran Escala (PGE)
Within the general planning framework set out by the forthcoming PNDP, there is a
project that, given the economic importance of the hinterland it will serve and themagnitude of the infrastructure involved, stands out as singular. Its working title isPuerto de Gran Escala or PGE (which can be translated as ‘Large Scale Port’).
The hinterland of interest is central Chile. It comprises five of the country’s
Regions1, including Santiago, the national capital and the major cities of Rancagua,
Valparaíso, Viña del Mar, La Serena and Coquimbo. The area is responsible for 60% ofnational GDP and is home to 66% of the country’s population. Among other types offreight, it produces a significant volume of agricultural products for export and generates
significant demand for imported retail goods. Most of the freight is transferred incontainers, with average traffic in the last three years (2010-2012) totalling 1.9 millions
TEU/yr.
There are currently two container ports in the Valparaíso Region: San Antonio andValparaíso. Their location is illustrated in Figure 2 overleaf, together with a general viewof each.

1.

The regions of Coquimbo (no. IV), Valparaíso (V), O’Higgins (VI), Maule (VII) and Metropolitana deSantiago.

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PERFORMANCE MEASUREMENT IN THE ROAD SECTOR: A CROSS-COUNTRY REVIEWBoth are mainly import/export facilities, with figures of 94% and 98% foreign tradefor Valparaiso and San Antonio2 respectively. The remainder is a mixture of cabotage
and freight in transit to/from Argentina. Each port currently has two terminals for freighttransfer. Table 1 shows the total volume of containers transferred during 2012 byterminal.
Table 1. Containers transferred in the Valparaiso Region (TEU/yr
Terminal

2012

Valparaíso Terminal 1

930 174

Valparaíso Terminal 2

12 473

San Antonio Terminal 1

1 067 846

San Antonio Terminal 2

1 425

TEUs transferred in total

2 011 918

According to the Latin American and Caribbean ranking of container transference(CEPAL 2012), Valparaíso port ranks 15th with San Antonio port in 13th position. If they
are considered as a single ‘greater port’ (both ports being close substitutes catering forlargely overlapping hinterlands), they rank 5th, between the ports of Cartagena(Colombia) and Manzanillo (Mexico).

2.

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Basis: tonnage

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PUERTO DE GRAN ESCALA (PGE)

Figure 2. Existing container seaports in central Chile

Coquimbo Region

T2
T1

Valparaíso Region
Valparaíso
San Antonio

Santiago

Metropolitan Region
Libertador Bernardo O’Higgins Region

Maule Region

T1

T2

Figure no.3 illustrates the layout of main roads and railway lines connecting Santiago
with the ports in the Valparaiso region.

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PERFORMANCE MEASUREMENT IN THE ROAD SECTOR: A CROSS-COUNTRY REVIEW

Figure 3. Trunk roads and railway lines connecting ports located in the Valparaiso region
with Santiago

R78

The main roads connecting the inland with the coastal port cities in the Valparaíso
Region are two concessioned motorways, i.e. Routes 68 and 78, both themselvesconnecting at Santiago with Route 5, the backbone of national north-south connectivity
by road. Route 68 connects Santiago with Valparaíso port with 119 km of very goodstandard two carriage motorway, including two tunnels (Lo Prado and Zapata). Route 78
connects Santiago with San Antonio port over a distance of 110 km, another very goodstandard two carriage motorway and no tunnels. Two-way Annual Average Daily Traffic3(AADT) measured in 2012 on Route 68 (at the Zapata toll, located 59 km from Santiago)
was 29 845 pcu/day and on Route 78 (at the Melipilla toll, located 66 km from Santiago)
was 15 212 pcu/day.
There are also two railway lines connecting Santiago with the ports in the Valparaiso
region. The railway connecting Valparaiso port with Santiago has a length of 187 km,
operated by locomotives with a haulage capacity of 1 200 tons, with 15 car trains
running 5 convoys per week. This accounts for less than 2% of Valparaiso port’s total
freight transfer.
In contrast, the railway line that connects San Antonio with Santiago, with a lengthof 110 km, moved over 710 000 tons in 2012, accounting for 22% of unpackaged freightand 3% of the containers transferred by San Antonio port.

3.

AADT is an indicator used in traffic analysis which measures the level of activity, in vehicles per day,of a given stretch of road. ‘pcu’ represents ‘passenger car unit’, an equivalence measure used tocharacterise a traffic stream composed of various vehicle types, using a common denominator.

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PUERTO DE GRAN ESCALA (PGE)

The container transfer capacity currently available in the Region is estimated at 2.3
M TEU/yr, more or less evenly distributed between:

Terminal 1 in the Port of Valparaíso, operated by concessionaire TPS; andTerminal 1 in the Port of San Antonio, operated by concessionaire STI.

The main characteristics of TPS and STI quays are displayed in Table 2:
Table 2. TPS and STI quays main characteristics
TPS quays Valparaiso
QUAY
Quay lenght (m)STI quays San Antonio

1

2

3

4

5

1

2

3

188,5

200

231,5

230,5

152,2

263

253

253

Total linear length (m)

620

382,7

769

Draft (m)

13,8

13,8

13,8

9,4

9,4 8,5

LOA (m)

142

200

229,5

230,5

107,5

363

253

253

1998-1999

1998-1999

1998-1999

-

-

1995

1995

1995

5 Gantry cranes + 2 Gottwald cranes--

Year of investment
improvement
Dock equipment

/

13,50

11,34

11,34

6 Gantry cranes

YARD
Total area (ha)Covered area

9,55
10.800

-

5,51
-

-

30,4
-

0,5

The respective state port companies, Empresa Portuaria San Antonio (EPSA) and
Empresa Portuaria Valparaíso (EPV), have successfully tendered their second container
terminals in recent times:

In 2011, EPSA awarded the ‘Costanera-Espigón’ project to the Puerto Central
concession; andIn 2013, EPV awarded the ‘Terminal 2’ project to OHL Concessions.

The Puerto Central and Terminal 2 projects, as they are commonly known, will add a
total of 1 500 m of pier length through a total investment of US$ 830 M, increasing thenominal installed capacity in slightly over 2 M TEU/yr. This, plus small increases provided
by minor infrastructure improvements to the existing terminals operated by TPS and STI(i.e. approximately 100 m pier extensions), should bring the total capacity in the region
to approximately 4.9 M TEU/yr by 2021.
5. Demand forecasting
As part of the preparatory work on PGE, in 2011 MTT commissioned a study with theaim among other things of reviewing and updating econometric modelling of demand.
The study was finished in May 2012.
Using historical data up to 2010, the analysis sought to explore various model
specifications, assess its statistical goodness-of-fit, and recommend a model on which tobase further analysis regarding infrastructure needs, cost-benefit appraisal, etc.

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PERFORMANCE MEASUREMENT IN THE ROAD SECTOR: A CROSS-COUNTRY REVIEWThe study tested the following explanatory variables, which were selected based on
both the availability of historical data and the estimated feasibility of subsequently
producing exogenous forecasts with which to forecast freight transfer:








National and regional GDP (Valparaíso Region);
GDP by economic sector and Region within hinterland;
GDP of foreign countries and/or economic zones to where Chilean exports areshipped;Population
GDP per capita
Copper exported through the Valparaíso Region.
Month and quarter dummies to represent seasonality

In terms of model structure, two main variants were tested:Linear Model

𝐷𝑒𝑚𝑇𝑜𝑛𝑚𝑜𝑛𝑡 ℎ,𝑦𝑒𝑎𝑟 = 𝑎0 +𝑎𝑖 × 𝑉𝐸𝑖,𝑦𝑒𝑎𝑟 +𝑖𝑎𝑚𝑜𝑛𝑡 ℎ × 𝑑𝑚𝑜𝑛𝑡 ℎ𝑚𝑜𝑛𝑡 ℎMultiplicative Modelln 𝐷𝑒𝑚𝑇𝑜𝑛𝑚𝑜𝑛𝑡 ℎ,𝑦𝑒𝑎𝑟 = 𝑎0 +𝑖 𝑎𝑖 × ln(𝑉𝐸𝑖,𝑦𝑒𝑎𝑟 ) +𝑚𝑜𝑛𝑡 ℎ 𝑎𝑚𝑜𝑛𝑡 ℎ × 𝑑𝑚𝑜𝑛𝑡 ℎ

Where:

𝐷𝑒𝑚𝑇𝑜𝑛𝑚𝑜𝑛𝑡 ℎ,𝑦𝑒𝑎𝑟 , represents the demand in tons for a specific monthof a year.
𝑎𝑖 , are the parameters determined by the regression for eachvariable.

𝑉𝐸𝑖,𝑦𝑒𝑎𝑟 , is the value adopted by the predictor variable i, each year

𝑑𝑚𝑜𝑛𝑡 ℎ , dummy for the month or quarter
These two structures were used to generate both aggregate container traffic
estimates and sector-specific ones (agricultural, copper and iron, wine and others).
Given the information available, several regressions were made considering thedifferent valid combinations between the model structure (linear/multiplicative,
month/quarter) and sets of predictor variables. Table 3 summarized the results for thethree models that delivered a coefficient of determination over 90%.

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Table 3. Analysed models

4Intercept

GDP

Value

Elasticity-21.52

1.98(-19.5)(32.1)

GDP_per_Capita
Elasticity

CopperElasticity

R2

RegionModel 191.23%

10.56

2.68

(99.1)(31.8)

Model 291.06%-25.641.90

0.4

Model 391.66%(-12.9)(27.6)(2.5)

The demand forecasts arising from these three models are illustrated in Figure no.4
Figure 4. Estimates from models 1, 2 and 3 (base: GDP growth 3%)

Figure no.4 shows that Model 2 (GDP per capita as predictor variable) produces thelowest estimates, followed by Model 1 (pure GDP) and finally Model 3 (pure GDP &copper production). The non-smooth nature of the latter is explained by step changes inthe explanatory variable derived from specific mining projects.

4.

Values in brackets are the t-statistic.

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PERFORMANCE MEASUREMENT IN THE ROAD SECTOR: A CROSS-COUNTRY REVIEW

Analysing the demand forecasts for different scenarios, Model 2 turned out to be theone with the least dispersion in the results as shown in Table 4. Therefore Model 2 wasselected for the following analysis.
Table 4: Results for year 2020

Scenario

Model 1Model 2Model 3

Low growth33.3 Mton

33.0 MTon

35.7 Mton

Moderate growth46.9 Mton

41.3 Mton

49.7 Mton

High growth39.5 Mton

36.9 Mton

42.1 Mton

For the purpose of the policy implications under consideration, it is important to note
that, even with these demand estimates, which could be considered to lie on low part ofthe spectrum, the argument in favour of swift action towards public tendering of new
infrastructure seems strong. This is discussed in more detail in the following section.
6. Balance between demand and capacity
Figure no. 5 illustrates the balance between nominal capacity and projected demandas per Model 2.
Figure 5. Demand & capacity - existing and projected container terminals in the
Valparaíso region

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According to these demand forecasts, at an average GDP growth5 of 4%, the total
nominal capacity in the port system would be exhausted around 2025, whilst at a rate of
5% this would happen in 20216. The elasticity considered for both, blue and red line, was
1.98.
As part of subsequent analysis carried out by MTT in conjunction with EPSA and EPV,
the demand estimates shown in Figure no. 5 were again revised; this time, the goal was
to do some initial exploration as to the real capacity of the hinterland to generate thefreight volumes predicted by the ‘black box’ of the econometric model. In summary7, theresults are slightly more conservative than those contained in Figure no.5, with ademand forecast lying between the red and blue lines, much closer to the blue one, withGDP growth of 4.5% and elasticity of 1.65 . Under this scenario doubling of demand
would occur a year later, i.e. while 10 years were needed to double demand in theprevious analysis, 11 years are needed in the later analysis.
In any case, the main conclusion of this analysis is that, at some point in the firsthalf of the 2020s, simply as a result of underlying demand growth, it is likely that Central
Chile will need additional container transfer capacity.
7. The need to advance rapidly
In the view of MTT, there are at least four main reasons which make advancement on the
new PGE project a priority:The scale and complexity of issues posed by engineering challenges,
environment permit approvals, port-city relationships, etc, imply long time spans
between preparation of tenders and inauguration of the first terminals in the new
port. This will be the first time since the early 1900s that new breakwaters will bebuilt in the country, so there is no recent experience on a project of this nature,and certainly not within a systematic environmental approval process such as theone in force, introduced two decades ago;

The fact that existing terminals could face some degree of obsolescence as aresult of changes to the merchant fleet serving the region, i.e. the advent of large
post-panamax vessels, which may require not only longer dock lengths but also
deeper ports as shown in Figure No. 6 (Valparaíso currently has an authorised
draft of 11.4 m whilst San Antonio has a draft of 12.4 m – see figure 6 for theevolution of container ship drafts);



The potentially catastrophic consequences that severe port congestion could
have on foreign commerce for a country that generates 38% of its GDP fromexports (OECD average being 27%; all data from 2011). The exact effects ofcongestion in the Valparaíso region are uncertain but, for example, could include

5.

Reference Chilean GDP growth rates were 5.6% in 2012 and 4.5% on average in 2003-2012.

6.

Ports in the Valparaíso region are already exhibiting some symptoms of congestion. For example, in
2011, a ratio of waiting time/service time of 16.8% was reported as average for the STI and TPS
terminals, 10% being a broad ‘best practice’ reference figure. This translates into the conclusions
drawn from Figure no. 5 being to some extent optimistic: the point where the capacity and demand
curves intersect would possibly entail significant degrees of congestion.

7.

For brevity a full account of the analysis has been omitted from this document but more details areavailable on request.

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PERFORMANCE MEASUREMENT IN THE ROAD SECTOR: A CROSS-COUNTRY REVIEW

ships being diverted 500 km south to ports in the Concepción Region (thus
imposing on freight the additional cost of longer journeys by heavy goods vehicle)
and/or the introduction of ‘congestion fees’ such as that imposed in Chennai(India) in 2011, where charges between USD 75 and USD 145 per TEU werereported8; and.
The unknown economic and strategic consequences of a potentially significant
fraction of Chilean exports being forced to rely on feeder services to Callao (Perú).

In turn, the costs of advancing swiftly are considered comparatively low;
approximately US$ 2 M have so far been spent on studies, for a project than could cost
as much as US$ 2 750 M, i.e. less than 0.1%. MTT is hence taking what can beconsidered a prudent stance: in the face of potentially serious consequences for the
economy and relatively low costs for ‘buying insurance’, let us all just move as quickly as
possible.
Figure 6. Evolution of New Generation Container Ships

Source: Ashar and Rodrigue, 2012. All dimensions are in metres. LOA: Length overall.

8.

For illustration purposes, consider the case of a hypothetical 5,500 TEU ship on the route between
Long Beach and Valparaíso, loading/unloading 1,200 TEU in the latter and currently facing total port
costs of approximately 74,000 USD. A surcharge of 75 USD/TEU would result in an additional cost of
90,000 USD, thus more than doubling the total port cost of calling at Valparaíso. In the case of ahypothetical post-panamax vessel of 10,000 TEU capacity, assuming a transfer lot of 2,500 TEU, the75 USD surcharge would result in an additional 187,500 USD per call.

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8. Work so far
The ministry has actively pursued parallel progress by both port authorities on
preparatory studies for public tendering of a single alternative; the choice between
alternatives to be made at a later stage, based on the technical evidence produced bysuch studies. Work began in early 2011 with an analysis, carried out by MTT, to identify
potential locations for a PGE-type project within a radius of approximately 150 km to thenorth and south of the existing ports. This produced three alternative locations.
Based on this work, in January 2012, EPV and EPSA were formally commissioned by
the Minister to produce by the month of December the first stage of the technical studies
necessary for an objective comparison of alternatives. At EPV’s request, a fourthalternative was added to the initial three identified by MTT.
In December 2012, studies were presented to the MTT and SEP 9 authorities,
including basic engineering, design, cost estimations, road and rail requirements in theport vicinity, preliminary project appraisal and legal analysis. As a result of theseanalyses of the four potential locations identified, two front-runners appeared: one in San
Antonio, located a few hundred meters to the south of the existing terminals, and one in
Valparaíso, located approximately 2 km to the north of Terminal 2, in an area commonly
known as Yolanda.
9. PGE profile
To provide an idea of the size and configuration of the project, Figure no. 7
illustrates two of the alternative designs currently being considered.
Figure 7. PGE alternative designs and key figures (values are indicative, designs
preliminary)
San Antonio

Valparaíso

STI

TPS

OHL

P. Central.
Design vessel: post-panamax of 400 m LOA
Maximum total dock length: 3 560 m in two fronts
Breakwater length: 3 700 m
Backup area: 170 ha
Nominal capacity: 6 MMTEU/yr
Estimated total investment: US$ 2 750 M

9.

Design vessel: post-panamax of 400 m LOA
Maximum total dock length: 1 770 m in one front
Breakwater length: 2 300 m
Backup area: 44 ha
Nominal capacity: 3 M TEU/yr
Estimated total investment: US$1 420 M

The ‘Sistema de Empresas Públicas’, SEP, is an independent agency that monitors performance ofstate-owned companies, advises the Treasury on management decisions and sets financial goals forthese companies. It is interesting to note that all 10 chilean port authorities have a sustained recordof positive financial results.

Alexis Michea — Discussion Paper 2013-20 — © OECD/ITF 201317

PERFORMANCE MEASUREMENT IN THE ROAD SECTOR: A CROSS-COUNTRY REVIEWIn summary, in its maximum size option and final development stage, the project
would be equivalent to more than triple the capacity currently installed in the region andtriple the investment committed by the two new concessionaires.
10. Work in 2013 and beyond
During 2013 work is progressing along two complementary lines: one technical (inan engineering/transport planning sense) and one financial.
The first aims to produce definitive versions of basic engineering and projectappraisal (both private and social), whilst the second is looking at the definition of atendering model suitable for the type of port development that is PGE. This relates to thefact that the project considers providing artificial sheltering infrastructure, principally
large breakwaters, which poses a number of questions. Could a 30 year concession
provide efficient funding and financing for the breakwater, itself a large and potentiallyrisky expenditure? Would it be it better to jointly tender the breakwater and port
terminal, or to do it separately? Would the current bid-winning system, i.e. by lowest
composite transfer rate offered (in US$), work well in this case?
In answering such questions, it will be crucial not to introduce distortions into amarket which should, at that stage, have four independent operators. This is especiallyrelevant in a scenario in which the government was committed to funding part or all of
the breakwater cost.
The goal for 2013 is to finalise these analyses, so that government authorities canmake a decision on the definitive location and instruct the selected port authority
accordingly. If this is accomplished, an important step will have been taken towards
publicly tendering the first terminal of the PGE by 2015. Delay beyond that would pose aserious risk to having the terminal operative in time.

18

Alexis Michea — Discussion Paper 2013-20 — © OECD/ITF 2013

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