First loan for an Andes tunnel to connect Argentina with Chile as part of Mercosur road net

The Inter-American Development Bank (IDB) has approved a US$40 million loan that will allow for bidding to begin for the Agua Negra tunnel, which will connect San Juan province in Argentina with that of Coquimbo in Chile. The tunnel is key to improving trade integration between the two countries and the rest of Mercosur through a new corridor that will connect the Atlantic and the Pacific from Porto Alegre, Brazil, west to Coquimbo, Chile.

The Structuring Program for the Paso de Agua Negra International Tunnel (PETAN by its acronym in Spanish) will finance the structuring and preparation of the project, assistance to the authorities of both countries, including legal, technical and environmental consulting, and institutional strengthening, as well as the final engineering design for the tunnel.

PETAN is the first IDB support program for Argentina and Chile in the preparation of a series loans for this engineering project, as construction of the tunnel will cost an estimated US$1.5 billion over eight a half years. The current Agua Negra mountain pass, located 4,765 meters above sea level, is used by between 8,000 and 10,500 vehicles a year, and is not equipped to handle freight. What is more, between May and October it is closed because of snow.

The main passage between Argentina and Chile, the Mendoza-Valparaíso route through the Cristo Redentor Pass, is also affected frequently by bad weather and forced to close 30 to 40 days a year, at a cost of US$1.5 million a day.

Viability studies on cross-border tunnels in the region have been carried out in an effort to resolve this problem. Of all the routes studied, the Paso de Agua Negra stands out as it lies along an ocean-to-ocean corridor with great potential and would represent a new logistical link between Porto Alegre (Brazil) on the Atlantic side and Coquimbo (Chile) on the Pacific.

The Agua Negra tunnel will be 13.9 kilometers long and stand at an altitude of 3,620 to 4,085 meters above sea level. It will be able to handle freight trucks, reducing the length of the current passage by 40 kilometers, increasing road safety and cutting travel time by about three hours.

The new tunnel project is part of efforts by both countries to develop regional integration strategies in order to plan and connect their infrastructure. The main goal of these efforts is to strengthen and facilitate trade flows between the two countries, thus contributing to regional economic growth. Economic integration between Mercosur and Chile is one of the greatest potential sources of economic growth in the region. It raises the prospect of giving countries along the Atlantic basin access to ports on the Pacific coast – and access for Chile to ports on the Atlantic – stimulating trade with bustling markets in Asia.

The PETAN comprises two simultaneous technical cooperation loans of US$20 million, one each for Argentina and Chile, both with an implementation period of two years.

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MercoPress