Peru's Chinchero airport yet to take off

Friday, May 19, 2017

The long-delayed US$520mn Chinchero airport project, as well as the job of Peru's transport and communication minister, remained in suspense this week after the opposition-controlled congress left a no-confidence vote pending.

The Fuerza Popular party, which controls 74 seats in the 130-member congress, grilled minister Martín Vizcarra for over three hours on Thursday over the contract terms for the Chinchero project, which was suspended in March.

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Fuerza Popular, whose leader Keiko Fujimori lost to President Pedro Pablo Kuczysnki in last year's elections, said it will wait for the comptroller's review of the contract terms before deciding whether to hold a vote on Vizcarra's performance.

Congress, which has already forced two of Kuczynski's ministers to resign, called on Vizcarra to explain a contract addenda whereby the state will finance US$140mn in initial earthworks at the project. Aviation experts also claim the 3,700m altitude of Chinchero will mean larger airplanes will be unable to land there, and that the concessionaire lacks the funding to build the project.

"I believe this report will conclude that the regulations have not been upheld," Fuerza Popular spokesman Daniel Salaverry said to the minister during a televised hearing. "Before you are submitted to a no-confidence vote, the best thing you could do is to present your resignation."

Vizcarra, who answered 83 questions from congressmen on the Chinchero contract, said the addenda will save the state 1.9bn soles (US$600mn) in interest payments.

"It was necessary to modify the contract, thereby avoiding major economic harm to the country," Vizcarra said in a statement on the ministry website. The addenda "doesn't alter competency, the economic balance or risks for the state or the concessionaire."

President Kuczysnki has said he will stand by Vizcarra, adding that the minister is needed to oversee the reconstruction of north coastal infrastructure damaged by record flooding and landslides in March.

Lima-based Andino Investment Holding and Argentina's Corporación América won the bidding in 2014 for the airport in Cusco region, a project which will take five years to build and which will be the gateway to the Machu Picchu Inca citadel, Peru's biggest tourist destination.

Kuczynski in February laid the cornerstone for the project in Cusco region before being forced to suspend construction weeks later due to objections about the contract from the comptroller's office.

Andino's CEO Carlos Vargas didn't immediately reply to an e-mail seeking comment. The company is close to securing financing for the project, Vargas told BNamericas earlier this year.

Tourism, which brought in an estimated US$4bn in 2016, is one of Peru's biggest hard-currency earners. Peru, which last year negotiated the start of flights by British Airways, China Eastern Airlines, Interjet, Plus Ultra and a unit of Ryanair, expects over 4mn visitors this year.

Kuczynski, who took office in July 2016, is struggling to unlock US$25bn in blocked infrastructure investment, including airports, ports, highways, railway, a natural gas pipeline and water projects.