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Peru transport infrastructure investment tops US$8.8bn

Bnamericas Published: Tuesday, February 23, 2016

Peruvian President Ollanta Humala's government has invested a total 30.9bn soles (US$8.82bn) in transport infrastructure since 2011, as he seeks to accelerate spending before the government changes hands at the end of July.

The amount invested in road, rail, port and airport infrastructure tops the 17.3bn soles invested during the government of former President Alan García (2006-2011), according to the finance ministry. Humala's government also invested 15.4bn soles in potable water and sewerage projects and 7.17bn soles in irrigation projects.

The investment in the transport sector will help reduce the US$159bn dearth of Peruvian infrastructure and reduce the amount of time wasted in transit (estimated at 4bn/y man-hours), according to consultant firm Ernst & Young.

"This kind of public works is fundamental to shore up long term economic growth," Ricardo Manrique, an official at the Peruvian construction chamber Capeco, told state gazette El Peruano. "It's evident there's been greater development in this area."

The bulk of investment is now focused on Line 2 of the Lima metro, awarded after Brazil's Odebrecht completed the second stretch of the first line in 2014, according to the business group. Investors are also interested in building metro projects in Arequipa and Trujillo, Peru's largest cities after Lima, Manrique said.

Local investors have lined up at least US$40.1bn in infrastructure, transport and energy investment projects from 2016-2017, according to EY.

Investments will include a US$600mn, 30-year concession to increase Lima's water supply via a 10km trans-Andean tunnel, dam repairs and a new potable water treatment plant in Huachipa on Lima's outskirts, the consulting firm said in a statement.

Peru has US$14.5bn pending in PPP infrastructure investments, equivalent to 8% of GDP, according to the finance ministry. Excessive bureaucracy has held up tens of billions of dollars in mining, energy and infrastructure projects according to industry groups such as SNMPE, AFIN and Confiep.

President Humala, who was elected in 2011 on pledges to increase spending in the country's most impoverished areas, plans to increase the 2016 budget by 6.6% to 138bn soles, including an additional 12.2% in infrastructure spending. Humala is scheduled to step down on July 28 following general elections in April.

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