editorial at/@
tortillaconsal punto/dot com
By Karla Jacobs
23rd June 2010
When the FSLN government came to power in January 2007, it inherited a country whose infrastructure was on its knees. With few exceptions transport services had been neglected with roads, bridges, ports throughout the country left, literally, to rot, during the three previous neoliberal governments.
The lack of appropriate knowledge and skill of the former government officials responsible for these areas, combined with unrestrained corruption had created a situation whereby economic activity at a grass roots level had stagnated and access to basic goods and services was drastically compromised for people in most places in Nicaragua.
As current Infrastructure and Transport Minister Pablo Martínez explained to Tortilla con Sal during an interview on June 18th, towards the end of former president Enrique Bolaños' administration (2001 - 2006) the World Bank and the Inter-American Development Bank (which together finance the majority of infrastructure projects in Nicaragua) "had practically blocked disbursements [for infrastructure projects] ... in response to the findings of corrupt management of funds."
But not only did the former administration involve itself in the theft of public funds destined for infrastructure projects, it actually failed to use a significant proportion of the institution's assigned budget at all. In 2006, for example, as a result of inefficiency in project formulation and implementation 37% of the MTI's capital investment budget was simply never spent. Minister Martínez believes this is an indicator of the lack of interest shown by former MTI officials in fulfilling their responsibilities.
Since 2007 the new MTI authorities led by Minister Martínez have been able to win back the trust of the World Bank, the Interamerican Development Bank and others by reducing to less than 2% the percentage of investment capital left unspent each year and by providing solid evidence that the money destined to infrastructure projects is used appropriately. Since 2007 the Comptroller General Office has not found any cases of badly managed funds within the MTI.
As a result both of the renewed trust of international financial institutions and new sources of funding, mainly from ALBA (the Bolivarian Alliance for the Americas), the MTI's investment budget has increased by nearly 10% (from US$96,305,017 in 2006 to US$104,924,517 in 2010). The effective increase in terms of the amount invested is much greater, though, given that over a third of 2006 investment budget was not used.
One classic example demonstrating the difference between the former and the current MTI authorities' approach to spending is the bidding process for a major road construction project. referred to as "Los Caminos de Grava - Jinotega" (gravel roads - Jinotega). The original bidding process took place in 2006 and was overseen by the former administration although the construction project, which was financed by the Interamerican Development Bank, was not to be carried out until 2007.
After the FSLN came to power, however, the new MTI officials found reason to believe the three companies that had put forward offers had fixed the price of their offers unrealistically high and were able to persuade the Interamerican Development Bank to nullify the original bidding process.
MTI began a new process in early 2007 altering the requirements slightly in order to allow the participation of a greater number of companies. From the quotes offered during this second bidding process, it was clear that the MTI had been right in suspecting price fixing.
As a result of the MTI's insistence on nullifying the first bidding, the institution was able to save US$5 million on the construction of the road in question. According to Martínez, US$5 million is enough to build 20 kilometres of newly paved road. It is "enough to change the life of an entire town."
Neoliberal governments focused spending on international highways
As well as a radically different approach to money, the new MTI authorities have also developed a strategic plan which could be considered diametrically opposed to that of the previous governments which focused almost exclusively on the construction and maintenance of the Panamerican Highway and other international routes while roads crucial for regional production fell into total disrepair and a large proportion of the population found travel increasingly difficult.
Minister Martínez explains the unjust nature of the arrangement concerning the international highways implemented by previous administrations:
During the 17 years [of neo liberal governments] priority was given to the international highways - the road from Peñas Blancas [on the border with Costa Rica] to El Guasaule, Las Manos and El Espino [on the border with Honduras]. The construction of these highways cost Nicaragua US$800 million which was financed by international banks. But what is the effect of this?So while the international routes were maintained in top condition facilitating other countries' trade, roads in the rest of the country - the vast majority of which are not paved - deteriorated rapidly with each rainy season that passed. Indeed, according to recent MTI statistics, only 14.94% of Nicaraguan roads are in good condition (which means that they are guaranteed to be transitable at all times of year). Even routes to many important cities were vulnerable to collapse during heavy rains during previous governments.
Guatemala has the greatest GDP in Central America, and Guatemala exports a lot to Costa Rica. And in order for Guatemala's products to reach Costa Rica they go along the 600 km of Nicaragua's international highways.
Costa Rica has the second greatest GDP in the region and Costa Rica exports to the north - to Honduras, to El Salvador, to Guatemala - and all that produce goes along Nicaragua's highways. Panama also exports to the north crossing Nicaragua's highways. El Salvador exports a lot to Costa Rica and those products cross Nicaragua. Honduras trades with Costa Rica and those products cross Nicaragua.
Nicaragua has the smallest GDP in Central America which means that it is the country that produces least and exports least. However, it is a country that almost all international traffic passes through.
So who pays for this highway to be maintained? There is a tax on fuel in Nicaragua which is used to pay for the maintenance of these highways. For a number of reasons, however, fuel is more expensive in Nicaragua than it is in Costa Rica and Honduras. So the international traffic fills up before entering the country and doesn't buy a drop of fuel within Nicaragua. They don't pay the tax to maintain the 600 kilometres of highway.
So the ones who pay for this highway are the poor citizens of Bilwi, of Las Minas, of Pantasma, who might have never even travelled along the route. Or maybe a family member of theirs travelled half the route when they were migrating to another country to look for work .
The roads to the main coffee producing towns, Matagalpa and Jinotega, for example, were in a state of disrepair when the FSLN assumed power three and a half years ago. At that stage it could take up to three hours to travel the 35 kilometres from Jinotega, through Matagalpa, and on to Sébaco (where the road meets with the Pan American highway). Today, with newly paved roads, the same journey takes just 40 minutes.
MTI introduces a new strategic policy based on people and production
The road to Jinotega and Matagalpa is one of dozens of newly paved roads the government has invested in since 2007 as part of the MTI's new strategy focussing on people and production.
It is clear from government representative's words and actions that the current infrastructure policy has been designed taking into account the devastating human and economic costs of the lack of investment in roads prior to 2007.
One woman commented to Minister Martínez during the event marking the beginning of construction work on the road to Huehuete (Carazo) that "these puddles are not full of rain water but of our tears:"
When we have to tramp through the mud carrying our children and what little produce we have, or when we have to carry a sick person to the hospital and he dies on the way because no vehicle could come to get him, ... then we cry and cry. These puddles are full of our tears.
In economic terms Nicaragua suffers unquantifiable losses as a result of its inadequate infrastructure. In macro economic terms this is reflected in the fact that up to 20% of beef (one of the country's main export products) extracted from areas where there is no proper road is lost as a result of the bruising suffered by cattle in trucks en route to the slaughterhouse. In microeconomic terms it is reflected in the extent by which the price of basic products increases the further away you get from a paved road.
The red and green lines on the map below mark the completed road construction and repair projects carried out by MTI between 2007 and 2009:
graphic : MTI
As a result of these projects, agricultural producers from towns and communities in departments across Nicaragua are able to depend on affordable and reliable access to market for their products while the general population in these same areas has greater and more affordable access to basic goods and services.
Among the dozens of towns and cities which have benefited from newly paved roads since 2007 are San Juan del Río Coco and Telpaneca in the department of Madriz, Matagalpa and San Isidro in the department of Matagalpa, Jinotega, Guayacán, San Rafael del Norte, La Concordia and Llanos de Colón in the department of Jinotega, Aposentillo in the department of Chinandega, Malpaisillo, Poneloya and Las Peñitas in the department of León, San Francisco Libre, Quebrada Honda and Los Zarzales in the department of Managua, Casares, Huehuete, La Boquita, San Antonio and San Gregorio in the department of Carazo, La Virgen, Buenos Aires, Popoyuapa, Tola and Nancimí in the department of Rivas, Juigalpa, Cuapa, La Libertad, Santo Domingo, San Pedro de Lóvago and Santo Tomás in the department of Chontales, El Ayote in the RAAS, and San Miguelito and San Carlos in the department of Río San Juán.
Indeed the government's road construction plan has been so ambitious that at several points over the last three years the Nicaraguan paving block companies' production has been overwhelmed.
Road to Bilwi: a major engineering undertaking
The most ambitious road construction project undertaken by this government is the road to Bilwi. Three years ago it could take more than a week to drive the 450 kilometres to Managua from Bilwi (the only major town in the entire expanse of Nicaragua's north eastern region and a major seafood producer).
This route was infamous for being one of the worst in Nicaragua. Even heavy duty four wheel drive trucks would get stuck in the abundant "pegaderos" or swamps for hours or even days provoking costly repairs for their owners. The immense difficulty involved in getting to Bilwi by road also meant the price paid by the local population for all goods imported from the Pacific coast was often double or triple that paid by consumers on the Pacific side of the country.
Road
to Bilwi, 2006
photo: MTI
Today, after the MTI has dedicated extensive funds and expertise on improving the road, the same journey takes around 24 hours.
The ongoing project to radically improve the road to Bilwi is a major engineering project given the marshland quality of the terrain. The Venezuelan Army Corp of Engineers has been involved in assessing the viability of the project.
So far 40 bridges have been built or repaired with funds donated by the Danish government and work on the worst part of the route located near the town of Siuna has been completed. This part of the road is made up of various stretches of "pegaderos" totalling over 16km, which were once impassable even by the sturdiest vehicle during the heaviest rains.
When asked about this project, Minister Martínez had this to say:
With the road to Bilwi we have committed to guaranteeing transitability, to getting rid of the swamps. ... The road to Bilwi is one of the priorities [of this government]. We aren't going to finish the project [during this administration]. We are talking about 300 kilometres of road [from Río Blanco to Bilwi]. It is a huge investment. And no bank is willing to finance it because they say we won't get back what we invest.
But [this government] believes we can continue gradually improving the road and that within 15 years we will have a good quality highway which will last a long time.
MTI's long-term strategic plan
Towards the end of 2009 the MTI presented its long term road construction strategy to the World Bank and other international financial institutions which proposes the construction of 1,800 kilometres of roads between 2011 and 2020 (200 kilometres a year for each of the nine years). In 2009 the MTI built 150 kilometres with World Bank funds. So far this year the MTI is on track to build 200 kilometres.
Given the excellent relations the MTI currently enjoys with the institutions and governments that finance infrastructure projects in Nicaragua, it is not by any means implausible that the government will be able to secure the funding it needs to carry out the above mentioned nine year plan which would equip Nicaragua with the roads it needs to drastically improve social well-being and reactivate economic activity in even the most remote communities across the nation.
The FSLN government has invested impressive amounts in ports and airports
The FSLN government's infrastructure policy is not only based on road building, however. Impressive infrastructural improvements in terms of ports and airports have also been achieved over the last three years.
CISCONCO-WILBUR SMITH ASSOCIATES, the US transnational consultant company commissioned to write a National Transport Plan for Nicaragua by Arnoldo Aleman's administration in 1999, described the national port and waterways infrastructure as "obsolete." This report recommended the redefinition of the National Ports Company (EPN) something that did not come into effect in practice until the FSLN came to power in 2007.
Indeed the EPN was pretty much invisible during the previous neoliberal governments: apart from commenting on the latest calamity due to lack of investment in existing ports, the EPN kept a very low profile. Since 2007, however, the EPN has overseen major investments both in the improvement and maintenance of existing ports and the construction of new piers and ports. The total amount of money invested in the nation's ports between 2007 and 2009 was nearly US$15 million.
Nicaragua's main port for imports and exports and the country's only deep water port is the Corinto Port situated in the department of Chinandega on the Pacific coast approximately 125 kilometres from Managua. Like the other ports in Nicaragua, Corinto Port was in a seriously deteriorated state in 2007 due to a lack of appropriate maintenance work during previous administrations.
Among other maintenance and repair work at Corinto since 2007 the EPN has built two new platform scales which help to avoid congestion of trucks and vehicles that come and go to load and unload goods. The EPN has also built and equipped installations two kilometres before the port where companies can carry out all the necessary bureaucratic transactions to do with exporting and importing goods prior to reaching the main installations. The construction of this "antepuerto" has significantly reduced congestion at the port itself as well as making life simpler for export and import companies.
Like the Corinto Port the Arlen Siu Port, which is situated in El Rama on the Caribbean Coast and which is currently the main export / import port on Nicaragua's Caribbean coast, was also in a state of disrepair when the FSLN came to power three and a half years ago. Since then, teh EPN has invested nearly US$5 million modernizing and expanding of this port, which now has the capacity to receive 2,500 ton ships.
Newly built piers and ports support local industry and encourage tourism
In terms of the construction of new ports, the EPN has built four new piers and two new ports since 2007. The four new piers are situated in the Gulf of Fonseca (in the the north-west of Nicaragua) in the department of Chinandega. These piers were built following the signing of the Gulf of Fonseca Accords between Nicaragua, Honduras and El Salvador in 2007 in which the three countries agreed to encourage economic and infrastructural development in the gulf region.
These four new piers have been of immense benefit to local fishermen (fishing is the main source of employment in the area) forming a stable infrastructural base allowing local small, medium and large fishing companies to confidently invest.
The two new ports built by the EPN since 2007 are the Salvador Allende Port in Managua's Malecon area and the San Francisco Libre Port in the town of the same name. Both are situated on Lake Xolotlán (Lake Managua).
The Salvador Allende port is mainly aimed at reactivating economic activity by encouraging tourism in this part of Managua. Similarly the San Francisco Libre Port is aimed at realizing the town's tourist potential as well as serving as a key communication link with the capital and potentially with other towns situated on the shores of Lake Xolotlán.
The
newly built Salvador Allende Port
photo : www.epn.gob.ni
Bilwi, recipient of the three biggest infrastructure projects since 2007
EPN's biggest investment under way at present is focused on the town of Bilwi on Nicaragua's north Caribbean Coast. The town's port, which was originally inaugurated during the first Sandinista government of the 1980s fell into disrepair after it was privatized in the 1990s.
Then, in September 2007, the category five hurricane Felix which hit Nicaragua's Caribbean Coast causedsuch serious damaged to the port that its quay actually collapsed. It has since been rebuilt, however, and is today fully operative
At the beginning of 2010 preparation work to drastically expand the port increasing its receiving capacity from 2,500 ton ships to 15,000 ton ships by 2012. This project, which has a calculated value of US$22 million, is being funding by ALBA and carried out with technical assistance from Cuba and Venezuela.
Bilwi is also the recipient of the biggest airport investment since 2007 with the ongoing project to modernize and expand the local Bilwi airport. Until now this airport has only had the capacity to receive domestic flights. Once the current project, which contemplates a total investment of US$35 million, is completed later this year, though, the government hopes Bilwi will be able to establish itself as one of the main reference international airports in the Caribbean.
The logic behind the FSLN government's strategic decision to concentrate such significant investment in the Northern Atlantic Autonomous Region (RAAN), of which Bilwi is the capital, is to do with the fact that it is the most impoverished region of Nicaragua.
The vast majority of the region's 250,000 inhabitants work in agriculture and fishing but, as a result of different structural factors, are rarely able to earn enough to free themselves from extreme poverty. These structural factors include and are exacerbated by the almost complete lack of infrastructure investment in the region during previous governments.
EPN plans to construct a deep water port at Monkey Point
During an interview on Channel 4's "En Vivo con Alberto Mora" program in January of this year, EPN's president, Virgilio Silva, spoke about the company's plans for a deep water port at Monkey Point south of Bluefields on the Caribbean Coast.
The lack of a deep water port on Nicaragua's eastern coast significantly increases the cost of both importing and exporting goods to and from some of the countries with whom Nicaragua has a great amount of trade - for example European countries, Venezuela and the east coast of the US - given that products going to or coming from these countries have to go via the Panama canal to Nicaragua's Corinto Port or travel to Nicaragua by road from Honduras or Costa Rica, which both have deep water ports on the Caribbean Sea.
Virgilio Silva explains that Nicaraguan exporters currently pay between US$1,300 and US$1,500 for each container they export via Costa Rica or Honduras. With a deep water port at Monkey Point this sum would be reduced by US$500.
Another damaging repercussion of the lack of a deep water port on the Caribbean Coast is that the cost of fuel increases significantly. Indeed, as a direct consequence of the lack of such a port, fuel in Nicaragua is more expensive than in any other Central American country.
EPN plans to carry out the construction of this port with ALBA funds. At present the bidding process for the mega project has been held up, however, due to the legislative's delay in passing the New Ports Law.