$400M Caguas/SJ Novotrén project attracting takers

The Novotren route.

Interest in the Novotrén commuter train connecting Caguas to San Juan is apparently strong enough that more than half a dozen firms are waiting in the wings to participate in the bidding process for the project whose cost is estimated at $400 million.

“Thank God the interest is tremendous. We are very happy,” said Engineer José Izquierdo, who is the main advisor for the project at the Central Eastern Technological Initiative (Inteco, for its Spanish language acronym), an alliance of business, academia and municipalities from the island’s central and eastern region working together to promote the area’s development.

Inteco is the operational arm of Novotrén, a project initially championed by the late Caguas Mayor William Miranda-Marín.

At least nine consortiums have expressed an interest in developing the commuter service, according to Izquierdo. They include firms from Germany, India, Italy, South Korea, Spain and the U.S., he said.

Some of these firms are familiar with Puerto Rico, he said. That’s because last year they were drawn to the island by a similar project, a $365 million light-rail train system envisioned by former San Juan Mayor Jorge Santini as an extension of the Urban Train, which is run by the central government and connects San Juan with Bayamón.

Designed to run 5.3 miles from the historic Old San Juan district to the Sagrado Corazon Urban Train Station in Santurce, the light-rail train service would serve an estimated 28,700 users. San Juan is currently facing a difficult financial crisis but Mayor Carmen Yulín is on record saying she will pursue her predecessor’s project known as San Juan Automated Urban Transportation System, or Satour.

Meanwhile, the pre-qualification process for Novotrén could begin soon. The Puerto Rico Public-Private Partnership Authority (P3A), in charge of regulating private-public partnerships in Puerto Rico, is likely to announce a request for qualifications in the next two or three weeks, Izquierdo said.

Companies will have 30 days to submit their qualifications during which time they will also be invited to come to Puerto Rico for an industry outreach.

Turnkey project
Novotrén is a turnkey project, meaning that the winning bidder will have to handle all of its different phases; namely, design, construction, and operation. The company also must assume 100 percent of the project financing, with the government repaying the debt in installments over a period of time, just as if it were a mortgage, Izquierdo explained. Negotiations will determine the terms of repayment, he said.

Once P3A narrows the list of contenders down to four or five consortiums, participating bidders will be asked to submit requests for proposals. Izquierdo said evaluating the proposals should take about five months with a decision on the winning bid probably coming early next year. Actual construction, expected to take three years, could begin in March or April 2014, he said.

The Urban Train took almost a decade and $2.28 billion to become a reality. (Credit: © Mauricio Pascual)

Mass transportation off-track
So far, Puerto Rico’s experience with mass transit rail systems has been disappointing.

The Urban Train took almost a decade and $2.28 billion to become a reality. It finally kicked off in December 2004 and is now moving an average of 45,000 people during the work week, Monday through Friday. Weekend traffic is lower.

It has yet to make money.

According to information provided by the Highway and Transportation Authority (ACT), the train generates $8 million in yearly revenues.

In fact, the Urban Train is running at a loss of $80 million to $90 million a year, said ACT Executive Director Javier Ramos, adding that his agency is looking at ways of increasing income, such as developing 10 government-owned plots near Urban Train stations through new housing and commercial uses. The stations also include commercial spaces but the government has attracted very few leases.

One of the factors contributing to the train’s dismal performance has been the central government’s failure to build a fully integrated mass transportation system in which component parts, such as the bus system, can be relied upon to provide dependable service. With the commonwealth’s current fiscal woes, it is unlikely this issue will be addressed anytime soon.

A 10.7-mile, fully automated rapid transit, the Urban Train has 16 stations along a single line. Novotrén will cover 17 miles and have only three stations: two in Caguas and one in San Juan, either close to the Medical Center or in Cupey, where passengers will be able to switch over to the Urban Train.

‘Complex’ system
Izquierdo described the Urban Train as a complex type of mass transportation system. This will not be the case for Novotrén, which he expects to be financially successful. It will take between $10 million and $15 million to run and the project was designed to be financially self-sufficient within 10 years of starting operations, Izquierdo said.

A source familiar with the Caguas mass transit plan cast doubt on its financial viability. Such systems, he said, usually require tens of millions of dollars in state subsidies but that is the inevitable price for a service that, he added, helps reduce traffic congestion, contamination, and road accidents.

Gov. Alejandro García-Padilla and Caguas Mayor Willie Miranda Torres at the signing of an accord to get the proposed Novotren rail system between
San Juan and Caguas off the ground.

Novotrén is expected to move 14,000 passengers daily, drawing users from Caguas and adjoining municipalities, including Humacao, Naguabo, Juncos, San Lorenzo, Cayey and Cidra. Still unclear is whether the train will use magnetic levitation (maglev technology) or operate on diesel or electricity.

In anticipation of the future rail system, Caguas has sought to shore up confidence in mass transportation. For example, Izquierdo said that Caguas has enlisted drivers of small private buses and cars known as “publicos” into a novel experiment: Under Transcriollo, the city pays each driver a monthly subsidy of $800 to $900 to run along specific routes from 5:30 a.m. to 7 p.m. and pick up paying passengers along the way.

Kicked off in Oct. 2011, Transcriollo counts with a yearly budget of close to $2 million and 161 publicos providing reliable, daily transportation. To make sure that drivers don’t play hooky, the city has installed a GPS device in each vehicle to verify they are on the job. Within the next three years, this initiative will be extended to another 10 municipalities, Izquierdo said.

Novotrén is billed as “an innovative and sustainable mass transit system” that will unite Caguas, the central-eastern region, and the metropolitan area, three zones that concentrate 43 percent of the island’s population. Its biggest selling point, according to Izquierdo, is that it will make a commute which in heavy traffic can take up to three hours into a breezy, 14-minute ride.

Whoever comes out the winner in the bidding process for Novotrén, he said, will have to prove that it can provide the most cost effective service and that the offer it is submitting “is the best one for the island.”