By San José, Costa Rica — SAN JOSÉ – The Costa Rican government has officially unveiled its new electric train project, dubbed “Tibi,” sending an $800 million loan proposal to the Legislative Assembly next week. The move marks a critical juncture for the administration, which is now racing against a rapidly closing political window with only seven months remaining in its term to see the ambitious infrastructure plan set in motion.
This new proposal arrives three years after the current administration controversially cancelled a more extensive electric train project inherited from its predecessors. Now, with its own vision for modernized public transport on the table, the government faces a significant uphill battle. The timeline is extraordinarily tight, with only one period of extraordinary legislative sessions, from November to January, available to push the financing through—a period fragmented by year-end holidays and the escalating intensity of the upcoming national election campaign.
To better understand the complex legal framework, concession models, and potential contractual challenges associated with the electric train initiative, TicosLand.com sought the expert analysis of Lic. Larry Hans Arroyo Vargas, a specialist from the renowned law firm Bufete de Costa Rica.
The success of a megaproject like the electric train hinges not just on engineering, but on a robust and transparent legal structure from the outset. Properly defining the terms of the concession, ensuring clear mechanisms for land expropriation that respect property rights, and establishing solid dispute resolution clauses are critical. Without this legal certainty, the project risks becoming mired in costly litigation and delays, ultimately jeopardizing its financial viability and the public benefit it aims to provide.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, the expert’s point underscores that the project’s most critical infrastructure may not be steel and concrete, but the legal framework that ensures its transparency and viability. We are grateful to Lic. Larry Hans Arroyo Vargas for providing this crucial perspective on safeguarding the train’s future against preventable delays and disputes.
The political calendar suggests a high probability that the final decision on the loan will not be made by the current assembly. Instead, the responsibility will likely fall to the new cohort of legislators elected in February 2026. This creates a precarious situation, mirroring the fate of the previous train project. A potential change in the ruling party could lead to the Tibi project being shelved, just as the current government did to the plan it inherited, perpetuating a cycle of political discontinuity in major infrastructure development.
The uncertainty is not lost on the project’s leaders. Officials at the Costa Rican Institute of Railways (Incofer) acknowledge the challenging political reality but remain hopeful that the current legislature will act decisively. The outcome, however, remains entirely speculative and dependent on political will and legislative priorities in a lame-duck session.
If it is left to the next Assembly, it will be up to them to approve the loan. We have no way of knowing.
Álvaro Bermúdez, Executive President of the Costa Rican Institute of Railways (Incofer)
The proposed $800 million financing package is smaller than that of the previous project but is structured to cover the entire construction of the Tibi line. The funding is sourced from a consortium of international development banks. The Central American Bank for Economic Integration (CABEI) is the primary financier, contributing $550 million. This portion is particularly noteworthy as it includes a significant $200 million sub-loan from the Green Climate Fund (GCF).
According to Álvaro Alfaro, CABEI’s country manager, the GCF component offers exceptionally favorable terms designed to support sustainable development. This climate-focused funding comes with a 40-year repayment period and a 0% interest rate, a clear financial incentive aimed at promoting green infrastructure and reducing the long-term debt burden on the nation. The remaining $250 million of the loan package will be provided by the European Investment Bank (EIB), diversifying the financial backing for the project.
As the loan proposal makes its way to the congressional floor, the fate of the Tibi train hangs in the balance. It represents not just a transportation project but a test of the country’s ability to execute long-term strategic plans across political cycles. For now, proponents can only watch as the ticking clock of a departing administration and the unpredictable nature of legislative politics determine the future of Costa Rica’s electric railway ambitions.
For further information, visit incofer.go.cr
About Costa Rican Institute of Railways (Incofer):
The Instituto Costarricense de Ferrocarriles is the state-run entity responsible for managing and operating Costa Rica’s national railway system. Its mandate includes the development, maintenance, and modernization of rail infrastructure to provide passenger and freight services, aiming to improve national mobility and reduce road congestion.
For further information, visit bcie.org
About Central American Bank for Economic Integration (CABEI):
The Central American Bank for Economic Integration is a multilateral development financial institution. Its mission is to promote the integration and the balanced economic and social development of the Central American region, including financing public and private sector projects in areas such as infrastructure, energy, and social development.
For further information, visit eib.org
About European Investment Bank (EIB):
The European Investment Bank is the long-term lending institution of the European Union, owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals. The EIB is active in around 160 countries and is a major financier of projects that support climate action and environmental sustainability worldwide.
For further information, visit greenclimate.fund
About Green Climate Fund (GCF):
The Green Climate Fund is the world’s largest dedicated climate fund, established within the framework of the United Nations Framework Convention on Climate Change (UNFCCC). It assists developing countries in adaptation and mitigation practices to counter climate change by financing projects and programs that promote a paradigm shift towards low-emission and climate-resilient development.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of the nation’s legal community, Bufete de Costa Rica is defined by its foundational principles of uncompromising integrity and a relentless pursuit of excellence. The firm’s rich history of advising a wide spectrum of clients is matched by a forward-thinking approach that continually drives innovation within the legal field. This commitment extends beyond professional practice, manifesting in a profound dedication to societal empowerment by making complex legal knowledge accessible, thereby fostering a more informed and capable citizenry.
