Peru's Kuczynski to reform state agencies to spur infrastructure
Peru's president-elect Pedro Pablo Kuczynski, who is scheduled to take office July 28, plans to reform government agencies in a bid to eliminate obstacles to infrastructure investment, one of his senior advisors said.
Kuczynski, who won the June 5 presidential run-off, seeks to decentralize ProInversión, the state agency that promotes private investment, said Fiorella Molinelli, his advisor on energy and infrastructure matters.
The new government also plans to overhaul the finance ministry office known as SNIP, often blamed for holding up projects, and create a ministry of modernization and decentralization, Molinelli said, adding her team has been working for two years to identify the bureaucratic obstacles that have held up billions of dollars in projects, some for over a decade.
Kuczynski, who met with President Ollanta Humala to discuss the government hand-over, will declare "in emergency," so they can be fast-tracked, 15-20 delayed infrastructure projects totaling US$18bn in investment, she said. Projects include line No. 2 of the Lima metro, the southern Peruvian natural gas pipeline, the Lima and Chinchero airports and the Lima-Ica highway.
"We have received instructions from the president-elect to set up work teams to coordinate with investors to channel these needs and quickly unblock investment projects," Molinelli said at a private event in Lima attended by BNamericas. "The state has to focus on priorities, which are the needs of the country and whether they are in line with infrastructure investment planning."
The government and investors need to move fast to take advantage of low-cost financing available on the capital markets, a situation that is likely to last only another 1-2 years, consultant Fredy Vargas said at the event organized in Lima by infrastructure industry group AFIN.
While Humala's government has awarded a record US$20bn in public-private infrastructure concessions since 2011, tens of billions of dollars in infrastructure, mining and energy projects have been held up by permitting delays, according to industry associations such as Confiep and AFIN.
Humala's government needs to stop issuing often-conflicting regulations in its final weeks of office, AFIN president Gonzalo Prialé said. The next government will need to overturn at least 290 unnecessary regulations in its first 100 days in office, according to Kuczynski's designated finance minister Alfredo Thorne.
"The state has near-zero management capacity. There are regulations after regulations after regulations and in the end nothing works," Prialé said at the event. "It's a real disaster."
LIMA BELTWAY
Lima's US$2bn beltway project known as the Anillo Vial Periférico has been stalled since early 2015 despite receiving government approval of a feasibility study, said Jesús Bordallo, representative of Spanish concessionaire Ferrovial.
The project, which will create 70,000 jobs and reduce travel times for 4.5mn Lima residents, has been held up by lack of agreement with Lima municipality over rights of way, Bordallo said, adding the company was counting on the next government to clear the bottlenecks for the project.
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