The Mariel Overruns
From the town of Mariel, in the distance one can make out the giant cranes at the container terminal, like specters beckoning us over to hear their confessions, while Marcello, the character from the Shakespearean tragedy Hamlet, bursts into our imagination with his famous line: "Something is rotten in Denmark."
The maritime facility [See location on the DDC News Map] built by the Brazilian multinational Odebrecht, a company tarnished by corruption scandals and with ties to the state monopoly Petrobras, the investigation of which led to an earthquake that shook a major number of business, banking and political structures in the South American giant, is also enshrouded in suspicions of irregular practices.
Two years after its inauguration by the presidents Dilma Rousseff and Raúl Castro, and despite the serious suspicions uncovered by the Lava Jato anti-corruption operation, neither the Cuban nor the Brazilian side have published a master plan breaking down the container terminal's construction costs, or the contractual contents of the project carried out by Odebrecht and the Cuban-Venezuelan joint entity Quality S.A.
The big question is how to explain the $957 million price tag for a wharf facility that, according to official sources, covers an area of just 28 hectares, has a 700-meter mooring line, 4 super post-Panamax STS cranes, four Rubber Tire Gantry Cranes (RTGs), 22 tractor trailers, two tugs, and a maneuvering dock measuring 520 meters in diameter, and with just 9.75 meters of draft. This, in addition to the renovation of just over 30 kilometers of roads, the construction of only 18 kilometers of motorways, and almost 13 kilometers of railway lines; plus a limited set of civil works and the manpower provided by the over 6,000 Cuban workers who participated in the construction, for a paltry total of $20 million for three years of work.
So, where did the 957 million figure come from?
The figure of $957 million was taken from an article by the Brazilian portal Spotniks, dated October 20, 2014 and entitled: "20 obras que o BNDES financiou em outros countries" ( "20 works that BNDES financed in other countries"), authored by Felippe Hermes, which reveals the Brazilian financial contribution towards the construction of the Mariel Container Terminal (TCM), coming to $682 million, or 71 % of the total.
The source used by Hermes was the request filed by the representative Vanderlei Macris with Brazil's Minister of Development, Industry and Foreign Trade to clarify before the Executive Branch the data and constitutionality of said contribution.
However, information from the Master Plan for the Limón / Moín (Costa Rica) complex, drafted by Filip Augustyns and approved by Ronald Moor, with project number 9R4672.21, studied several offers that, when examined in relation to the cost of TCM, arouse suspicions of a serious cost overrun on the already controversial megaport.
Comparing the list with the costs
In said document one can find an offer featuring Anglo-Canadian financing that the American Gateway Development Group (AMEGA) proposed to its Costa Rican counterpart for the construction, to the west of the city of Moín, of a container terminal to receive megacarriers (with a capacity for 5,000 to 12,500 TEUs, and drafts of 14 to 15 meters, respectively), in order to use the central American nation as a transfer and distribution center, with one eye on the expansion of the Panama canal. The proposal would feature a dock long enough for five berths, with 10 super post-Panamax cranes, an 800-meter breakwater, a 40-hectare embankment zone, gained from the sea; a 300-meter access channel with a depth of 19 meters, and infrastructure including warehouses, roads and railways, at a total cost of $650 million – representing 67% of the total cost of the Mariel Terminal.
The breakdown of expenses – according to the above-named master plan – would be: $370 million for civil works and infrastructure; 170 million USD for equipment; and another $110 million for additional items.
The proposal was rejected by the experts because it did not meet the nautical, port, economic, social and environmental demands called for by the tender.
The controversy over Mariel's costs intensified when in a press release from the Inter-American Development Bank (IDB) Jean-Paul Rodríguez, a PhD in Transport Geography at the University of Montreal, stated that the funding for the Moín/Limón project came to $992 million, exceeding the cost of Mariel by a narrow 4% margin.
According to Rodríguez, in the project's first stage a 40-hectare island was built 500 meters from the coast, to feature a 600-meter multipurpose dock with 14.5-meters of draft. Another pier was also built for a 1,500-meter container terminal, duplicating the length of the Mariel Terminal, with six super post-Panamax STS cranes and a draft of 16 meters at the berths, to operate with vessels ranging up to 15,000 TEUs.
To complement the information, according to the Master Plan for the Limón/Moín Complex, added to the list of work elements was another dock for conventional cargo and bulk liquids (fuel); the renovation of the dock for bananas and refrigerated goods - as Costa Rica is the world's leading exporter of fruit, a maneuvering dock measuring 600 meters across; the retrofitting of the Limón port to accommodate cruise ships; the construction of a breakwater; the relocation of the mouth of the Moín River; the construction of warehouses, socio-administrative facilities, buildings, workshops, paving, dredging, etc. It is worth mentioning that the dredging involved a 1.5-m elevation of the subsoil as the result of an earthquake in 1991.
The cost of all this infrastructure work was estimated at $500 million.
The FOB prices in USD of the equipment, by unit, were: super post-Panamax STS cranes: 9 million; RTG cranes: 1.6 million; tractor trucks: 150,000; reach stacker: 600,000; forklifts: 300,000; reefer connections: 3,000; tugs: 7 million; and piloting vessels: 1.5 million, among others.
A bad deal or the scam of the century
The Brazilian National Bank for Economic and Social Development (BNDES) granted funding for the Mariel project in the amount of $682 million, with interest ranging from 4.44% to 6.91%, payable in 25 years, while the International Economic Association (AEI) contributed the remaining capital (275 million USD), according to the EcuRed encyclopedia.
In order to grant funding for construction abroad the BNDES requires that 85% of the equipment be built in Brazil, in order to guarantee jobs for its citizens. Although it grants funding to purchase equipment that the work requires that is not manufactured by its industries.
According to the official Cuban press, the largest ship that the Mariel megaport has received is the Chinese freighter Zhen Hua 10, measuring 244 meters, 39 across and with a draft of 8.5 meters, which transported the four super post-Panamax STS cranes installed in the spring. The post-Panamax category was due to its beam, exceeding 32.5 meters.
The payment of $957 million for a port that does not even meet the draft requirements to accommodate post-Panamax and super post-Panamax megavessels means that the master plan for Mariel container terminal ought to be published for the public's consideration.
Taking as a reference the costs of the Moín / Limón master plan and its constructive complexities, we estimate that, conservatively – with the help of specialists who requested anonymity – the cost of the infrastructure and civil works for the Port of Mariel should not have exceeded $300 million. To this number we can add 150 million for equipment and another 100 million for additional items, which would yield a total amount of 550 million – an estimate aggravating suspicions of a cost overrun, to the tune of $400 million.
If this concern were to be substantiated we could state that the Port of Mariel was either a terrible business deal or, in the worst-case scenario, a transaction concealing criminal activity.