Government to buy controlling interests in Corredor Norte, Corredor Sur

The government is taking over two troubled and privately owned toll roads. In a March 25 announcement President Martinelli said that his administration would buy 100 percent of the shares in the Corredor Sur toll road from the Mexican ICA construction company for $420 million and 51 percent of the stock in the unfinished Corredor Norte toll road from PYCSA, a controversial company owned by Máximo Haddad, a naturalized Panamanian of Mexican origin.

The government plans to create a mixed public-private toll collection and management company, ENA to run both toll roads. ENA's principal owner would be the Social Security Fund, with PYCSA as a junior partner.

The Corredor Norte, still unfinished and years behind deadline, has always been fly-by-night. The PYCSA construction company was hastily concocted, with its immediate start-up capital mainly in the form of heavy construction equipment taken from Mexico to Panama just in time to avoid it being tied up in litigation between owner Máximo Haddad and his Mexican creditors. Less than three months into the Pérez Balladares administration in late 1994 Haddad's company, which had never undertaken a project remotely as large, was awarded a concession to build and operate the Corredor Norte and Colon-Panama Autopista toll roads. But it never had the private financing, let alone the resources of its own to do the job. It did have the political patronage of the Mexican government at the time, then led by the outgoing Carlos Salinas de Gortari and the incoming Ernesto Zedillo of the formerly long-running Institutional Revolutionary Party (PRI) dynasty. PYCSA quickly missed deadlines set in its contracts but was never held to them, and eventually got funding through the state-owned Banco Nacional de Panama. Haddad also got questionable unsecured loans from the scandal-plagued and failed Hamilton Bank in Miami. But even with that deadlines were missed, property that was taken by eminent domain wasn't paid for, and measures mandated to protect wildlife in the Metropolitan Natural Park through which the toll road passed were ignored.

Eventually a court-ordered receiver was appointed for PYCSA, on behalf of the Metropolitan Natural Park. However, through a series of transfers that appear in some cases to have been back-dated and in any case which were fraudulent as to the creditors, seizures of assets were mostly avoided. The receiver, Kevin Harrington, said that he does not expect that the Metropolitan Natural Park will get paid for the land that PYCSA took or the wildlife protection measures that PYCSA didn't take as the result of the purchase that Martinelli announced.

During the Moscoso administration Haddad received a lucrative consulate from the Panamanian government. During the Torrijos administration a major PYCSA asset, the contract to build the Panama-Colon Autopista, was taken away and given to the Brazilian Odebrecht construction company, again without consideration for PYCSA's creditors. (That part of Odebrecht's story is another scandalous tale of cost overruns, deadly anti-labor violence and opaque government.) Since 1994 the Panamanian government has almost always been in a position to declare PYCSA in default and terminate the concession, but it has never done so.

ICA came to the Corredor Sur project with a long and good reputation, and far more than the tolls it would collect was given the old Paitilla Airport, now the Punta Pacifica area, as compensation.

There were various disputes about properties taken and compensation to be paid, in particular the Corredor's taking of lands belonging to Seguro Social which the company didn't recognize as such until the courts intervened. A lot of people didn't like the causeway upon which much of the Corredor Sur was built, either for aesthetic or environmental reasons. But the two biggest problems with the Corredor Sur were that its concrete started to crumble and flake almost as soon as it was built, and that it quickly became congested. The growth of upscale Costa del Este and more popular barrios in Juan Diaz, Tocumen and beyond added way more traffic to the road than had been contemplated --- except perhaps by those who know anything about urban planning and the tendency of new roads promoted as traffic solutions to quickly attract more traffic than projected.

So, will this nationalization of privatized roads mean an end to tolls, as was the case with the Arraijan-Chorrera Autopista?

Don't count on it. The Corredor Sur needs to be widened and the Corredor Norte needs to be completed, and Martinelli is claiming that this will be done without adding to Panama's national debt. How's that? Well, like the Boston Big Dig and many another major public works projects around the world, by "off the books" calculations. It won't be a debt of or financed by the national government's general fund --- the money for investment and the assumptions of debts and risks will be in the name of the Social Security Fund, not the national government as such.

Although one can never be entirely sure about the intentions of right-wing governments with respect to such things, not only does it not appear that President Martinelli intends to squander the Social Security Fund but as the Panameñista Party that's a major part of his coalition is descended from the founders of Seguro Social, he'd have trouble accomplishing that if it were his intention. Thus, as Panameñista legislator José Blandón told La Estrella, people should expect to continue paying tolls on the corridors.

economy