The persistent delay to infrastructure projects in Peru is primarily due to weak coordination between government entities, Oscar Arrs, a partner at local law firm Rubio Legua Normand, told BNamericas.

“The government created [private investment promotion agency] ProInversin to speed up projects but ProInversin has to deal with ministries and entities such as [Lima's state-owned water utility] Sedapal, among others,” Arrs said.

“The housing ministry, for example, has no experience with trusts or financing. Sedapal has some trusts but it doesn’t have enough control and is not up to speed,” he added.

These factors make it difficult to set things up and cause project delays. “Things are just not crystal clear,” Arrs said.

ProInversin was created in 2000 and its first concession agreements were drawn up when the entity had very little experience. Since then, the agency has been working to improve these agreements and draw up a standard contract.

OPPORTUNITIES

Having said this, Peru’s legal framework promotes foreign investment as it treats foreign firms the same way as national investors, Arrs said.

The government has also signed a number of bilateral agreements which include regulations. This will make it difficult for any future government to change the framework, according to the lawyer.

Private investment has been on an upward trend in Peru thanks to the favorable investment climate and the number of opportunities.

Just in transport infrastructure, the gap is at 37%, which means the availability of a huge number of projects in airports, ports, railways and highways, Arrs said.

SLOW PROGRESS

In December 2008, President Alan Garca announced 12 priority projects as part of his anti-crisis plan, ranging from highways to wastewater treatment plants. However, key initiatives, such as the concession of Paita port in Piura region or Lima’s Taboada wastewater treatment plant, suffered many delays.

Other project delays last year involved the Pisco port concession in Ica region; the IIRSA Centro highway which is being redesigned; the second regional airport package, which still has to be awarded; Salaverry port in La Libertad region, also still in progress; and the irrigation initiatives Majes-Siguas II and Chavimochic. The tender for Majes-Siguas II was recently declared void after no proposals were presented.

The Autopista del Sol II highway concession stood alone last year as it was carried out according to schedule and without much ado.

For 2010, the government has an ambitious 20-project goal. However, it remains to be seen if this year will be more successful in terms of execution.

For a list of this year’s 20 priority projects, go to this link

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