Ecuador signs $684m agreement for new Quito airport

A concessionaire comprised of American, Canadian and Brazilian investors has signed an agreement with the Mayor of Quito. The concessionaire initially signed a 35-year agreement in 2005 to take over Quito’s existing airport and construct a new one, but political troubles disrupted that contract.

Quiport, a concessionaire formed by Airport Development Corporation (ADC), HAS Development Corporation (HAS), Andrade Gutierrez Concessões, and Canadian developer AECON, has signed a $684 million agreement with the Mayor of Quito for the construction of a new airport in Ecuador’s capital city. 

The agreement will “formalize” Quiport’s partnership with the city, according to a statement from the Ecuadorian embassy. Quiport had originally signed a 35-year concession agreement in 2005, but that contract ran into political troubles two years ago, after new laws determined that Quiport’s tariffs were in fact taxes, and therefore could not be collected by a private company.      

Quiport chief executive Philippe Baril described this week’s agreement as a “continuation with some amendments” of the 2005 contract. He said that the concessionaire had 30 years left in the agreement.  

He said the investors and lenders were the same as in the 2005 contract. The lenders are: the Inter-American Development Bank; OPIC; Export Development Canada; and the US Export-Import Bank.

ADC & HAS president and chief executive Jeff Scheferman talked about Quito in a panel on airport privatisation at last month’s CG/LA Global Infrastructure Leadership Forum in New York. 

“The lesson learned of course is that political instability, political risk has to be dealt with upfront in very, very tight contracts,” Scheferman said. 

Scheferman said that the concessionaire had struggled through turnover between four different presidents and drastic changes in the legal framework.

“New laws came out and one of the fundamental changes was that tariffs, instead of being considered fees, were now defined as taxes,” Scheferman said. He added: “Not just our tariffs, every tariff. Taxi cabs, toll roads, ports, you name it. And of course it’s illegal for somebody in the private sector to collect public money.”    

“It’s been about a 22-month, I’ll say interesting, to be polite, process to solve this issue,” Scheferman said. 

OMERS Strategic Investments (OSI), an arm of the $48 billion Ontario pension fund, developed a partnership with ADC & HAS in 2009 in order to target “airport acquisition and operation opportunities in the growing airport privatisation market, initially in Latin America,” according to a statement on the OSI website. But a spokesperson said that OSI has no stake in the Quito project.