The Company Caminos del Valle SA signed a contract in 1993 for 18 years to be awarded the strip formed by the Interurban Highway System Cipolletti (Province of Rio Negro)-Neuquén. The General Audit Office (AGN, for its acronym in Spanish) observed that construction jobs with very little execution had halted, the Highway Concession (OCCOVI, for its acronym in Spanish) "failed to compute traffic increases" causing an economic imbalance "in favor of the concessionaire".

The report published this year, covers the period since the renegotiation of the contract in September 2006 to 2009. This agreement required the company to finish the remaining work and those defined by the OCCOVI, it also required the Federal Government to "take care of the maintenance works," reducing the work done by the company.

The initial agreement came “to solve the traffic problems arising from the failure of the highway bridge that connected the cities of Neuquén and Cipolletti". In 2004, they began the process of renegotiation, the OCCOVI noted that the work of the Third Bridge over the Neuquén River, "was running forward with a degree of 43.96%" and that "the construction of the West Beltway of Cipolletti City had yet to be constructed", something that had to be completed in 1998."

Regarding the last work mentioned, the watchdog said "it had been suspended since April 2008 with a total performance of 56.91%", although it should have been completed by that date. The audit added that the work "does not respond to the geometric and structural minimum conditions laid down in the contract for the entire road."

The report says that auditors traveled the roads and found "shortcomings in maintenance" as "longitudinal and transverse strains, poor road markings, and sagging road edges."

The audit said that, although the contract amendments were approved, "the grantee fails to meet one of the main guidelines for the justification of the renegotiation of the concession and continuity: perform all the tasks in the contract to the specified stages". After the AGN’s analysis, the traffic control entity reported that "they began the process for applying penalties."

Meanwhile, the Mayor of Cipolletti "blamed OCCOVI for the lack of compliance with the commitments" and deemed necessary "the termination of the contract because of the company." Meanwhile, representatives of Caminos del Valle "said to the AGN they had the intention to terminate the grant" for lack of tariff adjustment and claimed "to be in a negotiation with the Federal Government to terminate the contract by mutual agreement.”

According to the Renegotiation and Analysis of Utility Contracts (UNIREN, for its acronym in Spanish) who intervened in the renegotiation process, the company fulfilled the contract in an "irregular manner because of matters not attributable to themselves."

A Raise Please 

Según datos de la AGN, “de las inversiones previstas en $17.989.638”,Caminos del Valle dejó sin ejecutar “$10.564.435”. Además, los Auditores detectaron que el tránsito real superó lo estimado en el cálculo de la inversión: “El indicador que mide el volumen de vehículos que circulan por el corredor pasó de 29.500 vehículos en 1998 a 40.800 en 2008”. Aún así la concesionaria acusa al Estado porque no le otorga los aumentos suficientes en la tarifa de los peajes.

According to the AGN, "investments under the $17,989,638 budget" like Caminos del Valle didn’t use $10,564,435". In addition, the auditors found that the actual traffic exceeded the estimated in the calculation of the investment: "The indicator that measures the volume of vehicles on the highway increased from 29,500 vehicles in 1998 to 40,800 in 2008." However, the concessionaire accuses the Government of not allowing them to a sufficient increase in toll rates.

The new contract established a periodic tariff adjustment for price variation. In these cases, the request must be taken to the OCCOVI. According to the audit, the entity "recognized" the first request by 34.65%, but did not answer the rest: seven applications for review and 12 repetitions. To Caminos del Valle, "the lack of response" puts them in "a situation of financial drowning".

However, the AGN observed "a draft order that favors a tariff adjustment for 106, 95%", in which "the criterion for the rate redetermination was not explicit, preventing knowledge of the reasonableness of the decision."

The report noted that the OCCOVI "omitted compute traffic increases and the degree of completion of works when the readjustment by price changes, causing an imbalance in the economy contract for the company." In this regard, it was noted that "the works take into account the Tercer Puente and Avenida Circunvalación executed in a timely manner as provided by the Act Agreement" and "does not take into account reductions in spending.”