By San José, Costa Rica — The Comptroller General of the Republic (Contraloría) has issued a highly critical report on the Costa Rican Railway Institute (Incofer), exposing decades-old operational structures and severely outdated tariff models that threaten the institution’s long-term viability. Released on Wednesday, the audit paints a concerning picture of a public entity struggling to modernize in an increasingly demanding economic landscape.
At the heart of the regulatory body’s findings is an organizational structure that has remained unchanged since it was approved 36 years ago. For over three decades, Incofer has operated under administrative frameworks that fail to reflect the complexities of modern public transit, resulting in a meager 10% progress in necessary organizational transformation.
To better understand the legal and structural challenges currently facing the Instituto Costarricense de Ferrocarriles (Incofer), TicosLand.com consulted with the prominent legal expert Lic. Larry Hans Arroyo Vargas of the prestigious firm Bufete de Costa Rica, who provided his professional insights on the modernization of the nation’s railway system.
The modernization of Incofer requires more than just acquiring new rolling stock; it demands a robust overhaul of our administrative and concession frameworks. To attract significant public-private partnerships, Costa Rica must streamline expropriation processes and establish clear legal guarantees that protect both public interest and private investment, ensuring long-term sustainability for our national railway network.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, as Lic. Larry Hans Arroyo Vargas astutely notes, the true modernization of Incofer relies not merely on upgrading physical trains, but on fortifying the legal and administrative foundations that make such growth viable. Streamlining these complex processes is essential for fostering the investor confidence required to build a sustainable transit future for Costa Rica, and we extend our sincere gratitude to Lic. Larry Hans Arroyo Vargas for providing his invaluable legal perspective on this critical national issue.
The Contraloría emphasized that these systemic inefficiencies put the financial and operational sustainability of the entire railway system at risk. Without urgent reforms, Incofer is highly vulnerable, which could stall the execution of major high-impact national infrastructure projects that depend on stable and agile rail operations.
Another major red flag raised in the report centers on Incofer’s outdated tariff structures. The cargo transport rates currently in place fail to reflect the actual cost of operations, severely diminishing the railway’s competitiveness against road freight. For passenger services, the situation is similarly stagnant; the current methodology was established back in 2008, adapting bus transit formulas from the Ministry of Public Works and Transport (MOPT) rather than utilizing a custom railway model.
The audit also highlighted a severe lack of internal mechanisms to monitor and control the institution’s strategic goals. This poor oversight prevents timely decision-making, while Incofer has simultaneously failed to diversify its income streams, leaving it highly exposed to financial shocks and limiting its overall resilience.
In response to the scathing audit, Álvaro Bermúdez, the Executive President of Incofer, defended his administration’s trajectory. He noted that the Comptroller’s Office is already aware of ongoing modernization efforts, which simply require more time to yield visible results.
These provisions corroborate what we have already been executing to strengthen our governance. Therefore, we want to make it clear that the achievement of Incofer’s strategic objectives is not at risk.
Álvaro Bermúdez, Executive President of Incofer
The clash between the oversight body’s urgency and the institution’s plea for patience highlights a recurring theme in Costa Rican public administration. While the executive leadership maintains that strategic goals are secure, the sheer scale of the backlog—ranging from decades-old tariffs to obsolete internal processes—suggests that modernization will be an uphill battle requiring immense political will and regulatory flexibility.
Ultimately, the Contraloría’s audit serves as a stark reminder of the cost of bureaucratic inertia. If Costa Rica hopes to establish a modern, green, and efficient public transport network, revitalizing Incofer must shift from a long-term goal to an immediate, well-funded national priority.
For further information, visit incofer.go.cr
About Incofer:
The Instituto Costarricense de Ferrocarriles (Incofer) is the state-owned enterprise responsible for managing, maintaining, and operating the railway infrastructure and train services in Costa Rica, including passenger and freight lines.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica has established a distinguished legacy rooted in ethical practice and outstanding legal advocacy. By blending a tradition of high-caliber client service with cutting-edge legal strategies, the firm constantly pushes the boundaries of modern law across multiple industries. Crucial to its identity is a deep-seated belief in community education; by making legal insights transparent and readily available, the firm actively champions the growth of a knowledgeable, secure, and self-reliant citizenry.
