Days before an extraordinary congressional election and following a year of bitter government turmoil that brought spending to a crawl, the Government of Peru’s President Martin Vizcarra is looking ahead to a post election push through of high-profile Public Private Partnerships and high dollar concessions for Railways, Highways & Energy infrastructure buildout.
At a speech in Lima to present the Government’s Project Portfolio 2020-2021 on Tuesday, Rafael Ugas, President of Peru’s Private Investment Promotional Agency, Proinversión, said the Vizcarra Government will award $2.3 billion in Public Private Partnerships over the next 18 months.
Projects are expected to include a $720 million clean water program for Lima, a $464 million central highway project, a 30-year concession contract for the rehabilitation of the Andean Huancayo-Huancavela railway, and the design, construction and operation of a natural gas distribution grid that will span 12 Peruvian cities.
Economy Minister María Antonieta Alva said PPP initiatives would be a government priority into mid-2021. In 2019, Proinversión awarded only four projects for a grand total of $414 million, more than half of which went to a single project: the $270 million municipal wastewater sanitation and treatment facility in the Lake Titicaca basin, which was awarded to a Mexican consortium. This followed awards of $3.1 billion across twice as many projects in 2018.
Speaking at Tuesday’s presentation, President Vizcarra declared, “Closing [infrastructure spending] gaps is a priority of our Government. It is essential that all Peruvians can access basic services, attend to their health, study and perform in their regions.”
Along with Chile and Columbia, Peru led the 2019 Infrascope index of Latin American countries with the best capacity for executing sustainable public-private partnerships. The index, developed by the Economist Intelligence Unit, is a benchmarking tool that assesses countries on the basis of regulation, institutions, maturity, investment climate and financing capacity.
Strategic foreign investors have been following developments in Peruvian market with keen interest. A new piece in Americas Quarterly has pointed to marked increase in recent months from China in long-term infrastructure projects across Latin America. Increasingly, their analyst found, Chinese participation in Latin American infrastructure is occurring as part of international consortia and through newly created funds, rather than large-scale projects financed via its well-known policy banks.
In April of last year, Peru became the 19th Latin American country to sign on to China’s Belt & Road Initiative (BRI). At that time, the country announced that it would rebrand several projects under the BRI, including the building of major transportation terminals in the port cities of Chancay and Ilo with Chinese developers.
China is already the second largest foreign investor in Peru’s critical mining sector, with MMG Ltd.’s ownership of the Las Bambas copper mine, and Shougang Group’s ownership of its Marcona iron ore mine.
In October, China Yangtze Power Company, the world’s largest hydropower company, announced that it would pay $3.59 billion in cash to U.S. firm Sempra Energy for the latter’s Peruvian holdings, including Luz del Sur, Peru’s largest utility company.
The Sempra deal marked the largest overseas acquisition by a Chinese firm in 2019.