Consortium to get Lima airport expansion land 'by year-end'

Peru's government aims to hand over by the end of this year 100% of expropriated land to the Lima Airport Partners consortium (LAP) to accelerate work on the delayed US$1bn expansion of the country's main airport, a senior official said.

To date, 56.3% of the required land has been handed over for Lima's Jorge Chávez airport, transport and communications minister José Gallardo said. Expropriation proceedings are more than a decade behind schedule as the government has had to relocate 700 families from the area and decommission electrical, telecommunications and potable water infrastructure, he said.

The government may need to sign a seventh contract addendum with LAP after natural gas distributor Calidda, a unit of Colombia's Grupo Energía de Bogotá, and state water company Sedapal held up public works, Gallardo said. LAP last week warned it may initiate arbitration proceedings on account of the delays.

The Nestor Gambetta vehicle tunnel underneath the airport, aimed at easing traffic congestion, will be finished by November, Gallardo said. The government has been pushing Calidda since 2014 to reroute a gas pipeline that runs underneath airport land, he said.

"Jorge Chávez airport is important infrastructure," Gallardo said at a broadcast press conference. "There should be no doubt that we wish to give every guarantee that if there's any interference, it will be solved."

The expansion program, which involves a second passenger terminal and runway, aims to enable the airport to handle 30mn/y passengers by 2031 from 26mn last year. Expansion work will take five years, according to LAP, which took over the airport from state airport authority Córpac in 2001.

Lima, which will add a non-stop Lima-London service with British Airways in May to add to flights to Madrid, Paris and Amsterdam, is competing with Bogotá to serve as South America's main Pacific coastal hub. LAP is controlled by Germany's Fraport (70%), World Bank subsidiary IFC (20%) and investment fund AC Capitales SAFI (10%).

BACKLOG

Peru has a US$70bn backlog of infrastructure projects through 2020, 36% in the transport sector, on account of permitting delays and social conflicts, according to infrastructure industry association Afin. President Ollanta Humala's government has made some progress by awarding US$20bn in public-private partnership infrastructure concessions, according to Afin.

Humala, whose mandate ends July 28 following the second round of presidential elections June 5, increased the 2016 budget by 6.6% to 138.491bn soles (US$42bn), including an additional 12.2% in infrastructure spending.

Former congresswoman Keiko Fujimori and ex-banker and cabinet chief Pedro-Pablo Kucyznski, both of whom have pledged to eliminate bureaucratic obstacles and are in the run-off.