This is a best prospect industry sector for this country. Includes a market overview and trade data.
Overview
Peru’s most recent National Infrastructure Plan (PNIC), launched in 2019, identified a $110 billion long-term infrastructure gap over the next 20 years. The following sectors account for the shortfall: transport (44%), sanitation (20%), healthcare (16%), water (7%), telecommunications (6%), hydraulic (4%), electricity (2%) and education (2%). In the PNIC, the GOP prioritized 52 infrastructure projects, two-thirds in the transportation and communications sector. These total $28.5 billion with a goal for completion by 2025. These include clearing the Amazon waterway, building a ring road around the Lima metropolitan area, expanding Jorge Chavez International Airport the capital, improving broadband access in the Piura region, and enhancing irrigation systems in the La Libertad region.
Opportunities
The GOP is working to increase public and private investment in infrastructure and create mechanisms to give continuity to its policies. The GOP may use different investment mechanisms: traditional Public Works, Public-Private Partnerships (PPPs), Works for Taxes (Obras por Impuestos, or OxI), and Government-to-Government (G2G) agreements.
In 2021, 17 OxI projects were awarded, totaling $50 million, a figure higher than in 2019 ($22 million) and 2020 ($17 million) combined. Although this growth is due to the interest of regional and local governments in this mechanism, it will only come to fruition if the central government and other public entities maintain the political will to award the projects.
PPPs allow for the participation of private investors in public infrastructure projects and services derived from them, in the construction, operation, and maintenance stages of a project or only in operation and maintenance of existing infrastructure. Under Peruvian law, the types of PPPs include concession contracts, account participation, contracts for management, shared risk contracts, specialization contracts, and joint ventures, in addition to other contractual modalities allowed under Peruvian law. The property is transferred to the government at the end of the contract. Peru’s investment promotion agency, ProInversion, seeks foreign investment in nearly all areas of the economy, notably to support infrastructure. The ProInversion website lists all PPP projects. Additionally, many governments finance public works projects by borrowing from Multilateral Development Banks. Please refer to the “Trade and Project Financing” section. The Project Pipeline (2021 – 2022) under the PPP mechanism includes 22 projects distributed in different sectors with a total estimated investment of $6 billion. The main sectors by investment amount are Transport (3 projects), Water and Sanitation (3 projects), Education (5 projects) and Energy (6 projects).
According to the most recent Provias data, Peru has a total of 175,053 km of roads, comprised of 113,858 km (68%) of local roads, 27,506 km (16%) of departmental roads, and 27,110 km (16%) of national roads (16%). Paved roads account for 79% of national roads (21,434 km). but only 13% (3,623 km) and 1.7% (1,859 km) of the departmental and local roads, respectively. According to recent data from the Ministry of Transport and Communications, 141,557 km (86%) of roads are unpaved.
Thirty telecommunications companies transmit telephone, internet, and television signals through Peru’s fiber optic network, which spans 13,500 km (8,389 mi). A further 1,096 entities offer public telecommunications services, representing a 7% increase from 2009. Cellphone subscriptions have increased by 33% in the past five years, while landline internet subscriptions have increased by 46%. On average, 91% of households nationwide have at least one member who owns a telephone (within the Lima Metropolitan Area, 95%, and in the rest of the country, 89%). More than 76% of households nationwide have access to internet service, a considerable increase compared to the 19.6% of households with internet access in 2012. Peru has experience with private participation in the telecommunications sector. Many projects are now in operation, including the concession for high-speed internet broadband. In addition, the Peruvian government is planning to hold a 5G spectrum auction in the future, having already delayed the process several times.
Municipalities manage the water sector in Peru and generally have difficulty maintaining their water utilities. The infrastructure gap in the water and wastewater sector is $15 billion, and the Government of Peru has established a strategy to simplify the lines to close it; the main goal is to streamline processes and regulations that impact investment, financing, and management.
Challenges
Regulatory hurdles, land-access constraints, and weak government capacity slow the implementation of projects, raising questions about whether the GOP will meet its PNIC goals for 2025. Furthermore, Ministerial turnover has stalled progress on many infrastructure projects. Even in less turbulent times, half-finished infrastructure projects are a not uncommon in Peru. Given the potential for degradation of work already completed, relocation of machinery and labor, exposure to bureaucratic and legal processes, and bankruptcy of private contractors, even a temporary halt increases the chances of mid-construction abandonment.
To bid on infrastructure tenders from the public sector, international firms not domiciled in Peru must register with the National Registry of Suppliers (RNP) from the Supervising Agency of the Government Procurement (OSCE). For this, international firms must provide audited financial statements to OSCE (as opposed to affidavits with the Tax Authority as practiced in the United States).
Key Industry Events
Excon 2022: Contruction trade show.
Oct. 12 – 15, 2022
Jockey Plaza Convention Center.
Expo Agua: Main water expo in Peru.
Oct. 19 – 21, 2022
Jockey Plaza Convention Center.
- Business Monitor International Research
- Ministerio de Vivienda, Construccion y Saneamiento
- National Institute of Statistics and Informatics— INEI
- Obras por Impuestos
- ProInversión
- CAPECO