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Costs Of Argentina Power Transmission Line Soar 70%

Dec 1 , 2009 - Dow Jones - Newswires

Authorities on Tuesday set aside an extra $512.5 million to complete construction of a power transmission line in northern Argentina, as costs have soared more than 70% over budget.

The additional investment comes on top of the original $725 million cost of the 1,200-kilometer electric power transmission line, which will connect the country's northeastern power grid with the northwestern grid, uniting nine provinces with a population of about 8 million.

The Washington, D.C.-based Inter-American Development Bank on Wednesday said it has agreed to pay out another $300 million to cover the cost overruns, in addition to the $580 million loan authorized in 2006.

The Argentine government will commit a further $212.5 million to the project, on top of the $145 million it agreed to invest back in 2006, the IDB said in a statement.

That brings the total cost of the project to $1.24 billion.

The higher cost of equipment and materials such as steel, aluminum and cement, as well as higher labor costs, have contributed to the overruns, the IDB said in a statement.

The two sets of loans are for 25 years, with a five-year grace period at a variable interest rate, the IDB said.

A spokesman for the Planning Ministry wasn't available for comment.

-By Matthew Cowley, Dow Jones Newswires; +54 11 4103 6740; matthew.cowley@

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