Almost nine years after its inauguration, Puerto La Union in El Salvador is still not operating to its full capacity, and two years have now passed without a private company managing to take over its operation.
The explanation seems simple: There is no market for this port in the Pacific. Puerto La Unión, whose construction ended almost nine years ago, has not succeeded because there is no demand for cargo. The president of the Autonomous Executive Port Commission (CEPA) himself, Nelson Vanegas, recognizes it."..."The biggest problem is that there is no cargo.You can´t put the horse before the cart.You have to put first horse first, to pull the cart.This is a classic project in which they put the cart first, because there was no cargo'."
There are no companies interested in resuming operations at the Salvadoran port terminal under the public-private partnership model.
The tenders to award a concession of the terminal did not peak the interest of any company, and now, the possibility of operating the port La Union under the legal concept of a public-private partnership has also been found to not be an attractive option.The Salvadoran government has insisted on finding a way for La Union to become operational, even thoughthere is not enough maritime traffic to be served by this terminal and that of Acajutla.
A conflict of interest between the two ports has been revealed following a demand for the concession of the Puerto de La Union to include the Port of Acajutla.
The failure of the Puerto de La Union - the concession for which no longer even has any suitors - has a basic cause: neither today- nor in the medium term- is there enough maritime traffic for both terminals to have enough work.
An announcement has been made that the Autonomous Executive Port Commission will extend the consultation period for pre qualified companies until January 23, 2015 and the receipt of bids until December 23rd.
The concession of the "white elephant" project in El Salvador is still behind schedule. As before, when it was put back until October, the Autonomous Port Executive Committee has confirmed that, at the request of the pre qualified companies, the deadline for consultations and for receipt of bids for the concession of the port will be extended.
The change of government in El Salvador has not brought anything new to the eternal process of awarding a concession for the port terminal which appears to be economically unfeasible.
An article by Carlos G. Romero on Laprensagrafica.com summarizes what already appears to be an open secret in El Salvador: the local economy is not generating enough cargo traffic for the Port of La Union to be economically viable.
Just like in a never ending story, a new problem always arises, such as the requirement now for the State to provide funding for dredging.
Although the Port Act Grant approved by the Legislature in 2011 established that the cost of dredging the Port of La Union shall be borne by the State through the Executive Port Commission (CEPA), the companies pre-qualified to take part in the competition for the award of the operation of the port are now demanding more assurances that the Salvadoran state will meet that commitment.
The increase in the export of sugar containers offset a decline in dry bulk cargo in 2013.
In 2013 the port of Acajutla in El Salvador recorded the movement of 179,303 TEUs, while in 2012 159,879 TEUs were recorded, which represents growth of 12 %.
"This growth can also be expressed in terms of the cargo that arrives inside containers. Roberto Mendoza, manager of the Port of Acajutla, explained that in this case the annual growth was 17.9%.
Four years after its inauguration, the white elephant of El Salvador still has no operator.
The Autonomous Executive Port Commission (CEPA) has postponed for even longer the designation of the company that will operate the Port of La Union. The organization has added to the calendar a direct dialogue with companies interested in the port, which has put back the invitation to take part in the tender until at least February.
It has been announced that under the DR-CAFTA, a U.S. company will participate in the bidding for the concession without having to be prequalified.
"I will receive this company next week and want them to take part because under the Free Trade Agreement between Central America, the Dominican Republic and the U.S. (CAFTA), a company from the United States can enter the last phase of the tender directly without going through the prequalification stage" said Alexander Segovia, Technical Secretary of the Presidency.
Of the 34 global companies invited to prequalify for the "White Elephant" tender process from El Salvador, only 4 have presented their documents.
Eleconomista.net reports that "Samm Puertos S.A., founded with Chilean capital, Grupo Maritim TCB, of Spanish origin; Bolloré Ports and Logistics, also of Spanish capital, and International Container Terminal Servicies, based in the Philippines, showed interest in participating in the tender to operate the marine terminal, and presented documents demonstrating their expertise in managing ports and their availability of capital, among other things. "
The Comisión Ejecutiva Portuaria Autónoma is studying various alternatives for sediment cleanup, estimating the costs at between $8 and $30 million.
The cleaning will be done specifically in the port's berthing area. The Comisión Ejecutiva Portuaria Autónoma (CEPA) has decided to take on the task but is still studying the cheapest way to do it.
According to Alberto Arene, president of CEPA, they are awaiting the results of a study conducted by a Japanese cooperation in order to make a decision.
The plan is to improve access to the port, equipment and facilities for the movement of loads, and increase the depths of the three piers.
The Autonomous Executive Port Commission of El Salvador (CEPA) will develop a renovation plan for the port of Acajutla (Sonsonate) with $8.1 million of its own funds and $22 million from external sources.The port renovation plan was approved in July by the board.
The Autonomous Executive Port Commission is investigating extending by one month the deadline for receiving documents from companies interested in operating the port of La Union in El Salvador.
"We have a good feeling because there are four or five companies, some of the largest in the world, who have requested an extension of the deadline for submission of documents," said the manager of concessions at the Autonomous Executive Port Commission (CEPA), Carlos Federico Paredes.
The company granted the concession will be to invest $30 million over ten years instead of the five previously considered.
The Congress of El Salvador has passed a series of adjustments to the award of the container terminal of the Port of La Union, regulated by Decree 834 of September 2011. Among other changes, it provides that the State will have to ensure the operating conditions of the access channel, the place of shipment and assist in navigation.
The announcement that Acajutla will be reserved for bulk cargo and the port of La Union for the movement of containers, has drawn criticism.
Shipping Companies believe that La Union should offer services that are streamlined and at more competitive rates.
Elsalvador.com reports: "shipping companies and port unions have not welcomed the news from the Autonomous Executive Port Commission (CEPA) regarding the conversion of the port of La Union into a maritime terminal specializing in container handling and Acajutla for bulk services, some of them because they see higher operating costs and others because they are afraid of the specter of unemployment ".