In the last 10 years the government of the Dominican Republic has stepped up efforts to renovate and improve the nationwide road infrastructure
With a relatively long history of offering concessions for private development of public facilities and services, in electricity generation, airports and port terminals, in 2006 a general law on concessions was introduced to establish a universal set of procedures for concessions including road infrastructure
One of the key elements of competitiveness and a country’s development is transportation networks and connectivity. A well-developed transport and communications infrastructure network is a prerequisite for the efficient functioning of markets and for export growth.
In the Dominican Republic, aside from the core airport facilities that assure tourism arrivals and the port system that brings merchandise in and out of the island, the road infrastructure is what supports the country´s development.
One of the DR’s main assets is its tourism industry, concentrated in beach areas and the capital city, Santo Domingo, the first city of the Americas and the nation’s main business center. The main tourism areas of the country located in the east coast (Punta Cana, Uvero Alto) now stretch to the north-east region of the country (Samaná, Nagua, Rio San Juan), and the south (Barahona, Pedernales, Bahía de las Aguilas) is to be developed soon.
Over a decade ago, the Dominican government decided to interconnect its tourism areas through ¨vial axes¨ or freeways link-ing the capital city to the east, the north-east and the southern regions, considering that with a sophisticated road network, the country could evolve from its current status as a beach and golf experience into a multi-dimensional vacation destination with eco-tourism as well as historic & cultural dimensions. As a result, tourists could transit the DR by roads that would be modern, safe and excellently maintained. Taking into ac-count that the linear distance between the capital and the east coast is only 180 km, to the northeast no longer than 120 km and to the south 150 km, the average driving time between Santo Domingo and these beautiful tourist areas is just two hours--on well built and maintained roads.
To achieve this road infrastructure development challenge, the Dominican government has since granted concessions to some of the axes.
The first is the new highway Santo Domingo-Cruce de Rincón Molinillos (Samana), connecting the capital with the northeast coast via a 106km route. It has been developed by Autopistas del Nordeste C por A, its shareholders being the Colombian companies Grupo Odinsa and Grodco and the Dominican Consorcio Remix. The Dominican government has only provided 20% of construction expenses while the developers are covering the remaining 80% plus additional costs (financing and legal structuring, work supervision, hurricane and earthquake insurances, financial expenses), using a combination of its own resources and long-term financing.
The state has assumed the financial risk of the project between the operation and maintenance phases (traffic risk). The project was financed in the international marketplace with a bond issue in February 2006 of US$162 million for the 144 norm to 20 years at a fixed rate of 9.39%.
It was completed in the 27-month time-frame agreed in the concession contract and the highway was opened to public use in June 2008. It is the first such DR road infrastructure project of its kind to be completed within the agreed timing and budget, and it has contributed tremendously to tourism and real estate development in the Samana Peninsula. It has also had positive repercussions for agro industrial development in the east (Monte Plata).
With this success, the Dominican government has granted the project promoters (Odinsa, Grodco and Remix) the authorization to execute the second phase of this important road system. This is the road network that will link users of the Santo Domingo – Cruce Rincon de Molinillos (Samana) highway to their final destinations on the northeast coast. Called Boulevard Turistico del Atlantico or BTA (Atlantic Tourism Boulevard), this new road will stretch 124 km, of which 99 are rehabilitation and 24 new constructions. The promoters are financing 100% of the project’s cost, and the state maintains the traffic risk even during operation and maintenance phases. The project has been financed with the support of four multilateral institutions (the Inter American Development Bank; the European Investment Bank; PROPARCO, which is the subsidiary of the French Development Agency dedicated to financing the private sector; and the CAF). It is the first infrastructure project in the Carib-bean in which so many financial institutions are working together to provide funds to the private sector.
These examples show how with a low initial investment from the state in the construction phase of main public works, it is possible in the DR to bring major projects to fruition in a way that is both cost efficient and on time, facilitating a substantial upgrade to the traditional public works scheme.
A range of new road infrastructure developments will get underway following the completion of the Samana highway model, which will be inaugurating its second phase this year.