Lujan-Carlos Casares Highway

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On May 29, 2008, Homaq SA signed a 30-year concession contract with Occovi, the Argentine national road concession authority, for the construction, maintenance and operation of the Lujan-Carlos Casares Highway, a 240km stretch connecting the districts Luján and Carlos Casares, along the Ruta 5 highway. The concessionaire was responsible for maintenance of a 30km stretch from Lujan to Mercedes, the construction of a 110km highway connecting Mercedes and Bragado districts, and the pavement of 100km between Bragado and Carlos Casares. The project was awarded to Homaq SA [Argentina, 100%] by Occovi on October 9, 2007 through a competitive tender. Corporacion America-Helport [Argentina, 100%] and Supercemento SA [Argentina, 100%] also submitted final bids, but Supercemento SA was disqualified for failing to meet the bidding criteria. The government selected Homaq SA as the preferred bidder as its tariff of $ 3.9439 per toll plaza was lower than Coroporacion America-Helport’s bid of $3.9550. The project was awarded under Argentina’s tender rules of a private initiative which gave the initiator of the project an advantage in competitive bidding. The total project cost was initially estimated at 1.10 billion Argentine pesos, but was later revised by HOMAQ SA to 1.03 billion Argentine pesos (US $331 million). The project was to have an internal rate of return (IRR) of 12%. According to Argentine law published in 2003, a project’s IRR was not to exceed 15%. The Lujan-Carlos Casares Highway was to be taken over by the concessionaire 15 days after publication of the award, and tolls were to be collected where feasible. The majority of construction was to be completed within the first three years, although works were specified for the first fifteen years of the concession. Converted Argentine Peso 1030 million = US $331 million.