Paraguay: Viaduct project delayed, consortium to profit from land acquisition management

The Pedrozo viaduct, a critical infrastructure project intended to eliminate the "death crossing," remains incomplete months past its May deadline. Delays are attributed to the ongoing struggle to secure land for the project.

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The Pedrozo viaduct was supposed to be finished in May, but it remains unfinished due to the lack of land liberation.

However, a recent addendum to the concession agreement with the Rutas del Este consortium, which includes Spanish firm Sacyr and Paraguayan company Ocho A, reveals a new payment structure. Addendum No. 5, signed in December 2024, not only incorporates the viaduct into the 30-year Route PY02 concession but also establishes specific payments for Rutas del Este's "management" of the land expropriation process.

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Addendum No. 5 establishes specific payments for Rutas del Este for managing the expropriations and necessary procedures to liberate the right-of-way.

This means the consortium will receive substantial payments, totaling up to US$230,000 for "cadastre and processing or payment procedures," in addition to the US$1 million allocated for compensation to affected landowners. These payments are structured with fixed and variable components, including a US$100,000 fee for "Project Diffusion and Data Collection" for Stage 1, even as the company's public outreach has been criticized as minimal.

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US$ 230,000 are reserved for 'cadastre and processing or payment procedure' to be handled by the SOE.

The arrangement raises concerns that the consortium may be incentivized by these administrative fees, potentially contributing to the project's ongoing delays. The addendum appears to create a payment mechanism for managing land acquisition, separate from the actual construction, casting a shadow over the project's progress and the consortium's performance.

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The SOE will receive a fixed sum of US$ 100,000, VAT included, for Stage 1, 'Project Diffusion and Data Collection'.