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The Ministry of Public Works and the Korean company Hyundai signed the agreement that puts an end to the dispute over cost overruns in the construction of the bridge over the Chacao canal, the largest project that has been carried out under the direct contracting modality, with an original investment of around US $ 700 million. The pact implies the payment of additional works to the company for some $ 109 billion (US $ 138.5 million).
The modification in the contract must be endorsed by the Comptroller General of the Republic, although its content was surveyed by the government in recent months. For this reason, the entity is expected to take account of the changes.
The additional amount that the Treasury will finally have to pay for the construction of the project, yes, is practically half of the nearly US $ 300 million that the Consortium Puente Chacao (CPC), controlled by Hyundai, requested in the first instance. This, because it discarded half of the claimed values.
During several months each of the claims that were presented were analyzed to determine which of the requirements corresponded to the contract and which were additional, in addition to verifying the relevance of the values of each item. Among the claims rejected by the MOP is the payment of the additional seismic studies requested by the portfolio itself, for a total of $ 50 billion, since the contract establishes that these must be carried out by the company.
On the other hand, the lower amount is also due to the fact that during the analysis there were also significant differences in the valuations of the additional works that were to be paid for in accordance with the contract. For this reason, reaching the agreement took around 10 months.
This Tuesday the Minister of Public Works, Alfredo Moreno, made an inspection visit to the works of the Chacao Bridge, together with the vice president of Hyundai’s Infrastructure Division, Ji Sang Ju. After the tour, the Secretary of State explained that the accepted payments correspond to extraordinary works requested by the MOP to increase the safety of the bridge, mainly supports on the pillars and anchors.
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“They are greater supports due to the greater depth of scour in the bridge piers, a different system of locks (called Japanese locks), and the use of piles and not footings in the anchor massif of the cables -particularly on the island of Chiloé and also in other places – because there was a worse terrain than what was considered. There is also an increase in the bridge’s safety factor, ”he explained.
“In addition to this, we have agreed with the consortium that all facilities, camps, offices, docks, platforms, will pass free of charge to the Treasury at the end of the work,” he added.
To date, the construction of the bridge is 20% complete and the Ministry of Public Works estimates that it will be ready in 2025. The installation of about 36 piles is already 100% complete. Currently, there are around 800 people who are working on the project. The bridge will reduce transfer times, which are now carried out by barge, from 30 to 40 minutes to just 3.
Minister of Public Works after agreement with Hyundai: “Everything that corresponds has been fulfilled”
The discrepancies between the MOP and Hyundai date back years. But the issue escalated when the company warned of the impossibility of continuing with the works. On December 23 of last year, the consortium sent a letter addressed to the Minister of Public Works, Alfredo Moreno, stating that the MOP, once the project was awarded and its scope and price agreed, commissioned modifications that implied a different project. This, in turn, translated into higher costs, which, the firm said at the time, were confirmed by the principal. But according to the company, these modifications did not materialize in the contract during the previous government or after taking over the current administration. For this reason, he accused the MOP of breaching the commitment due to cost overruns.
The MOP responded to the company’s accusations and pointed out that same day that “the State, through the previous and current governments, has not accepted these requests, since, among other reasons, it is a contract for design, engineering and lump sum construction, which does not consider extraordinary works ”. Faced with Hyundai’s assertions that cast doubt on the construction of the Chacao Bridge, the MOP asserted that if it happened it would be an extremely serious event and that the consequences of this were established in the contract. Finally the works never stopped.
However, in February this year, President Sebastián Piñera announced an agreement, after months of public controversy with Hyundai. The company, which quickly reacted to the President’s statements, asked to formalize it in writing. “The MOP and Consorcio Puente Chacao have reached an agreement in order to resolve the dispute and focus on the development and successful completion of the Puente Chacao,” said Ji Sang Ju, vice president of Hyundai’s Infrastructure and Environment Division at the time. Engineering & Construction Co., Ltd. Although in the same statement he stressed that “this agreement requires Hyundai to waive several of its rights in order to achieve a compromise and mitigate the losses it has suffered so far, which demonstrates its commitment to Chile. and with the Chacao project ”.
