The Puerto Rico Public-Private Partnerships Authority has confirmed Goldman Sachs and Morgan Stanley were the front-runners to bid for the privatization project of PR-22, the 52-mile stretch of highway that runs from San Juan to Arecibo, a week after word got out that the New York-based investment banking firms were jockeying for the $1 billion contract.
The consortias of Goldman Sachs Infrastructure Partners II, L.P. and Abertis Infraestructuras and Morgan Stanley Infrastructure Inc. and OHL Concesiones submitted their sealed proposals for the first toll road project to be procured as a Public-Private Partnership under the Puerto Rico P3 Act of 2009, meeting with the set deadline, the agency said.
“Today we complete another important step that will make possible totally new investment in our economy,” said PPPA Executive Director David Álvarez. “The competition has been strong and fair thanks to our highly professional, transparent and rigorous process.”
As reported by News is my Business, last week the Financial Times reported that the banking firms were participating in the 10-month-old privatization process that the Gov. Luis Fortuño administration launched to turn the operation of one of the island’s busiest roads over to private hands.
The next step is an analysis of the proposals that involve setting up an administrative concession to finance, rehabilitate, operate and maintain existing toll roads PR-22, known as the José De Diego expressway, and PR-5, which is located in Bayamón.
The winning consortium must make significant investments in to rehabilitate the toll roads turn them into world-class level highways with respect to paving, signage, lighting, vehicle flow, safety, and service and toll areas, among others, the PPPA said.
Furthermore, the winning consortium must follow certain requirements to make the roads safer and more durable.
“We will comply with the analysis of proposals and make our recommendations to achieve a great project for Puerto Rico,” said Highways and Transportation Authority Executive Director Rubén Hernández-Gregorat. “This partnership will give way to the modernization and maintenance of our existing infrastructure and to improved services and safety for our drivers.”
PR-22 is the busiest highway in Puerto Rico and has seven tolling stations, the largest of which, Buchanan, accounted for 25.8 million vehicles in fiscal year 2009. The revenue generated by this highway during the same year was $85.1 million through the Electronic Toll Collection System, according to a description posted on the PPPA’s website describing the concession proposal.
The winning proposal should be announced next month, with the private operator taking over the management of the project during the last quarter of this year, PPPA officials said.
“The people of Puerto Rico will still be the owner of these toll roads while it benefits of world-class improvements that a private partner will be able to offer at this time when the Government of Puerto Rico does not have the capacity to do it. This Partnership will be of great benefit for all,” Álvarez concluded.
The selected consortium will have to make an unspecified up-front payment to the Highway Authority.