Peru pushes ahead with flooding reconstruction program

Peru's central government began training elected local authorities around the country following regional and municipal elections last month.

Government and municipal officials met in Piura region, one of the hardest hit by record flooding in 2017, said Edgar Quispe, head of the reconstruction with changes (RCC) agency. Thousands of officials elected October 7 will take office January 1, sparking concerns the changeover will delay infrastructure projects.

The government has been widely criticized for reconstruction delays after floods, torrential rains and landslides sparked by the El Niño phenomenon (pictured) that caused casualties and, according to the central bank, substantial damage.

To date, the government has allocated 1.3bn soles (US$400mn) to 825 infrastructure projects in Piura, with work ongoing on projects totaling 705mn soles in investment, according to Quispe.

"The last thing we want in the reconstruction is that the change of authorities creates delays. We want continuity," Quispe told state gazette El Peruano. "The executive is ready to provide the new authorities with all the information on things that have to be done and to provide technical assistance."

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In other infrastructure news, work is due to get underway in January on the US$61.5mn San Andrés-Guadalupe Red Vial 6 project in Ica region that will make the 54km section of the South Pan American Highway a dual carriageway road, the housing and construction ministry said in a statement.

Approval of technical reports and allocation of lands are at the final stage, according to the ministry.

Other road infrastructure projects scheduled for 2019 include four bypasses over the South Pan American Highway: Lurinchincha (27.2mn soles), Pozuelo Norte (29mn soles), Salas (27mn soles) and Camacho (26.5mn soles), the ministry said.

Construction

Projects such as the US$1.2bn Jorge Chávez airport expansion are expected to drive 7% growth in the construction industry next year, deputy finance minister Hugo Perea said.

Construction "is going to be one the most dynamic sectors," Perea, a former economist at Spanish bank BBVA, told El Peruano. "We're going to see better execution by private investment next year."

The government would have to invest about US$16bn/y, or 8.2% of GDP, over the next decade to close an estimated US$160bn infrastructure gap, according to US ratings agency Moody's. Peru's infrastructure investment averaged 4.6% of GDP from 2006-2015, it said.

However, the Odebrecht corruption scandal known as Lava Jato has slammed the brakes on billions of dollars in public-private partnership projects (PPPs).

"The targets seem attainable but insufficient to close the gap without jeopardizing the health of public finances," Moody's said in a report. "PPP projects have been slow to restart and continued suspicions of corruption pose significant challenges for all projects at every stage of development and completion."