Peru accelerating investment in roads, schools, housing

Tuesday, November 14, 2017

Peru's government, which has begun work on a 25bn-sol (US$8bn) flooding reconstruction program, is pushing ahead with infrastructure investment ranging from roads and schools to a new city as President Pedro Pablo Kuczynski taps surging metals export revenue to finance public spending.

Construction is moving ahead on the 221km Red Vial 6 highway in Ica region after 55 parcels of land were expropriated, according to the transport and communications ministry. Work is 80% finished on the US$11.4mn, 6.4km section of the 41.1km Chincha-Ica stretch of the South Pan American highway, the ministry said in a statement.

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At the same time, five projects in the flood repair portfolio totaling 475mn soles in investment will be managed by private companies, according to the reconstruction with changes (RCC) agency.

Record flooding, torrential rains and landslides caused by the El Niño phenomenon in March left at least 163 dead and 291,000 homeless, and caused billions in damage to infrastructure.

Companies including miners Antamina and Volcan, cement producer Cementos Pacasmayo and a unit of SAB Miller will finance the projects as part of the tax swap for infrastructure program known as obras por impuestos, RCC deputy manager Luis Felipe Gil told reporters in Lima.

The projects include new hospitals in Huarmey (95mn soles), Recuay (97mn) and Parcona (34mn), and flooding protection works in the Huaycoloro (129mn) and San Idelfonso (120mn) river watersheds, Gil said.

Kuczynski, who marked his first year in office in July, seeks additionally to accelerate US$25bn in infrastructure investment, including airports, ports, highways, railways, a natural gas pipeline and water projects.

"The difficulties in the development of infrastructure projects are gradually being reduced," Scotiabank Perú analyst Carlos Asmat wrote in a report. "Over the rest of the year we expect greater investment in specific projects and in general over the next two years, depending on the concession of new projects and whether particular obstacles can be overcome."

In other infrastructure news, the new city of Olmos in Lambayeque region, the country's biggest housing infrastructure project, is 20% completed, according to the housing and construction ministry. The city is linked to the Olmos irrigation project.

The 455mn-sol project, which involves building 22,000 homes and roads, sidewalks, potable water and sewerage treatment plants across an area of 734ha for a population of 115,000, has created 1,200 jobs to date, deputy housing minister Jorge Arévalo said in a statement.