Miga has provided US$108mn in political risk insurance for the development of a toll road in the Dominican Republic. The insurance covers a US$14mn equity investment in and US$162mn bond issue for Autopistas del Nordeste C Por A for up to 20 years against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.
Colombian and Dominican investors are jointly providing equity for the project. The Colombian partners – Grupo Odinsa, Grodco, Odinsa Holding, and Grodco Panama – are charged with managing the project, operating the concession, and securing financing. The Dominican partner, Consorcio Remix, will provide local equipment and labour.
The project consists of the design, construction, operation, and maintenance of a 106km toll road that will connect Santo Domingo with the country’s northeastern peninsula. The 30-year concession – the country’s first-ever highway licence – was awarded to Autopistas del Nordeste in 1999 through an international bidding process.
The project is consonant with the World Bank Group’s strategy of restoring economic growth and competitiveness in the country, given the highly positive economic impact in terms of reducing transportation costs and providing the infrastructure needed to further develop the tourist area of Saman.
The project is expected to lower transportation costs by reducing distance and travel time from 220km and four hours to 120km and 1.5 hours respectively. Progress on the toll road has already led to investments in a free trade zone that is connected by the road to the international airport of Santo Domingo.
Other development impacts include growth in agribusiness, as farmers will have faster and cheaper access to markets in the capital, and tax generation estimated at US$50mn over the life of the project.
In addition, revenues generated by the project above a specific threshold will be paid to the government. The project is expected to create 2,465 jobs during the construction phase, and about 1,300 once operational.