The stagnation of the refinery project could be the reason for China's loss of interest in Costa Rica, after having stopped the disbursement of a $24 million "freebie", the purchase of $1 billion worth of Costa Rican bonds, the development of an industrial pole, and the extension of a road.
EDITORIAL
The diplomatic shift from Costa Rica which privileged mainland China over Taiwan - in contrast to all of its Central American neighbors- held the promise of an injection of Chinese investment and development in the country, in public infrastructure, energy, and manufacturing centers.
The state run oil company in Costa Rica registered losses above $24 million during the first nine months of 2015, despite having the highest prices in the region.
In the first nine months of 2015 the Costa Rican Oil Refinery lost more than $24 million. The state run company, which has had a monopoly in refining and sale of fuels in Costa Rica for more than half a century, has payroll costs representing 56% of its total expenditure.
Entrepreneurs are used to having insomnia brought on by worrying about the taxes they have to pay, which go towards paying for the permanently unfinished adventures started by civil servants who get to sleep without any problem, because they never have to be responsible for what they do.
EDITORIAL
Like Puerto La Union in El Salvador, the alleged refinery to be built in a joint venture between China and Costa Rica is fast becoming another white elephant in Central America, as it generate huge expenses but produces nothing. At least the Puerto de la Union is already built, and maybe, just maybe, someday will be used for something. Instead, the Chinese-Costa Rican refinery is still just an idea, which so far has only served to feed the pockets of officials at Soresco, the company which is supposed to build and manage it.
In most cases, whoever uses this phrase is thinking only in their own gain, and not in the benefit of the other, just as China is doing while promising aid to Costa Rica.
EDITORIAL
Interestingly, as soon as the issue of the failed oil refinery project to be built in partnership with a Chinese company is made public, the ambassador of that country appears in Costa Rica, carrying under his arm a portfolio of cooperation projects from its generous government to be carried out with the Central American nation (see article Crhoy.com "Solis said that China has more cooperation projects for Costa Rica").
Costa Rica's state oil company has announced an agreement with China to incorporate into the design of an oil refinery "production of biofuels and green fuels as a fundamental linchpin of operations".
EDITORIAL
Several years ago Costa Rica became embroiled in a serious problem after signing contracts with the Chinese government and Chinese companies for the financing and construction of an oil refinery.
The Solis administration says that it is no longer an issue whether a new refinery will be built, but rather they are analyzing "whether or not it will work" doing it with China.
The government of Luis Guillermo Solis has made it clear that it believes a new oil refinery needs to be built, for which it had signed a contract with the Chinese government, who will fund the work.
The state run firm Recope has affirmed the need to build a refinery with the Chinese, citing the existence of a contract which is already being run.
Instead of focusing on strategies for renewable energy generation and opening up the energy market in the country, the authorities of the Costa Rican Oil Refinery insist on building an oil refinery, using funds from the Chinese government.
The extension of the road to Limon and the construction of a refinery in Moin, both to be funded by the Chinese government, will be renegotiated by the Solis administration.
Two major projects in infrastructure which began under the Chinchilla administration are now being analyzed by the government of Solis, due to the criticism against the conditions imposed by the Chinese government for the provision of the $395 million for the expansion of the road from San Jose to Limon.
Signatures are being collected to present a bill by popular initiative, to eliminate the state monopoly on oil refining and fuels marketing.
The deputy from Libertarian Movement, Otto Guevara, is starting this month the process of collecting signatures to present to the Legislature, via popular initiative, for a bill that aims to remove the monopoly of the state-owned Costa Rican Oil Refinery.
On June 11, the Costa Rican Oil Refinery will issue 10-year bonds at the rate of the passive base rate plus 2.15%, with a AAA risk rating (cri) awarded by Fitch Ratings.
With a AAA risk rating (cri) designated by Fitch Costa Rica, the issuance of debt securities will be placed for a period of 10 years and a gross rate referenced to the passive base rate + 215 basis points.
The Mexican government is considering constructing a pipeline and eventually a refinery to supply the region.
Miguel Hakim, Mexican Secretary for Latin America and the Caribbean, said his country is considering building a refinery and natural gas pipeline which would cross the isthmus and would be an alternative option for generating power at low cost. Petroleos Mexicanos (Pemex), has $2 billion to invest.
High fuel prices are seriously affecting the economy, making it necessary to consider removing the state monopoly in favor of free importation.
Jorge Guardia in an opinion piece in Nacion.com explains that the country must make two important decisions, the first is what to do with Recope and the second how to reduce fuel costs. He sets out three options for the first situation.
The Chinchilla administration is insisting on building a refinery, this time using the method of an international tender.
The new concept aims to "dilute the Chinese accent from the controversial project ", after the Comptroller General of the Republic (CGR) slowed down the project upon discovering that there were conflicts of interest in the feasibility report for the refinery.
The feasibility study for the project was undertaken by a subsidiary of the Chinese company which is a partner in the project, a situation that is prohibited under the contract with the Costa Rican state refiner.
The Comptroller General of the Republic of Costa Rica also found "weaknesses in the feasibility study," and ordered the Board of the Costa Rican Oil Refinery Company (Recope) to refrain from using the feasibility study conducted by the Chinese company HQCEC "and any others that rely on this", which in practice means stopping the project of building a refinery at a cost of about $1.5 billion.