Tuesday, June 19, 2018

Government proposes P3s to issue traffic fines, build roads

By on April 21, 2017

SAN JUAN – The hike to traffic fines announced by the government earlier this week was accompanied by a proposal to create public-private partnerships (P3s) for the issuance of these citations electronically. According to Transportation & Public Works Department (DTOP by its Spanish acronym) estimates, $30 million to $70 million are lost in potential annual revenue.

Transportation is one of the areas in which the private sector could form partnerships with the government, officials said Thursday during the first day of the P3 Summit sponsored by the executive branch to reactivate the economy through these alliances.

As explained by the government’s chief of information technology (CIO), Luis Arocho, it is not about reviving the controversial traffic-camera fines project, but of automating the system, as was achieved by the Guaynabo Municipal Police’s traffic department.
The project could reduce the current time of more than 15 months it takes to issue the ticket, introduce it in the system, send it by mail to the driver and issue a payment to only 48 hours because everything would be electronic. Driver would also have the option to pay the fine immediately, with a discount, which would increase collections and reduce operating expenses.

Another area in which the government is promoting P3s is in the operation of parking lots, proposing to establish parking meters to increase revenue.

The third transportation partnership alternative is in the construction or extension of roads, for which the government has two proposals, for PR-22 and PR-5. In the former, there are two alternative for routes divided into five segments each to extend the highway from Hatillo to Aguadilla. For the first alternative, called model D1, constructing one of the segments at a cost of $222 million is being proposed.

Hundreds of local and international investors registered for the P3 Summit. (Juan José Rodríguez / CB)

Hundreds of local and international investors registered for the P3 Summit. (Juan José Rodríguez / CB)

The second alternative is for the E1 route model, for which the private sector could build one of the segments at a cost of $252 million or two segments for $402 million. In any case, it would take PR-22 from Hatillo to Camuy, which would be possible with three forms of financing: through private activity bonds (PABs), requesting funds through the Transportation, Infrastructure, Finance and Innovation Act (Tifia), or combining both.

Regarding the extension of PR-5, the government estimates that the permits could be issued in 2020 and that the purchase of land and construction would cost $170 million. Estimated toll-collection gains are $5 million annually in 2014 and $8 million in 2039. The maintenance cost is $1 million.

The government’s last transportation proposal is for the construction of reversible lanes with tolls, similar to those used on PR-22. DTOP recommended a lane of this kind between PR-20 and PR-199 in Guaynabo at a cost of $20 million, with estimated earnings of $1 million from the dynamic toll. A reversible lane between PR-52 and PR-1 in Ponce was also suggested—costing $15 million—between PR-17 and PR-18 or between PR-2 and PR-20.

In neither case does the property go to the private sector, but would be long-term leases, officials at the forum explained.

At the conclusion of the forum, Caribbean Business consulted with some of the attendees who seemed pleased with the presentation, mainly because it was concise, clear and had specific projects.

“It seems to me that the whole process has been excellent because at the end of the day, for this to work there must be integration at the governmental level … They have opened [P3s] to unsolicited proposals and that is brilliant because it allows someone to come with a proposal; you did the study, the study cost you, you don’t get the proposal, but eventually they give you the study money. It’s a nice environment,” said Carlos Rom, capital partner and CEO of Four Points Consulting Group.

Rom said he attended in representation of investment firms from Spain, China and North America with an interest in investing in the island, and suggested it is possible these present proposals related to projects for PR-18 and PR-52.

Andrés Salinero, the economic and commercial adviser of the Spanish Embassy in Puerto Rico, told CB that he attended to eventually present to Spanish investment firms the available P3 alternatives. Although he welcomed the proposals, he said that in the case of construction, the permitting process could be delayed so much that they would be issued almost before the next elections, in 2020.

“When you have such long time periods, you run the risk of losing (the investment) because the election campaign begins and the rest is put aside,” explained Salinero, who said that a dozen Spanish companies, of which six have no presence on the island, attended the P3 Summit.


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