This is a best prospect industry sector for this country. Includes a market overview and trade data.
In 2019, Peru launched a National Infrastructure Plan (PNIC), highlighting a $110 billion need over the next 20 years to bridge Peru’s long-term infrastructure gap. This gap is distributed among the following sectors: 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 of which are 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, improving broadband access in the Piura region, and enhancing irrigation systems in the La Libertad region.
Chart: Long-Term Infrastructure Gap (Billions USD)
The GOP is working to increase public and private investment in infrastructure and create mechanisms to give continuity to its policies. Different investment mechanisms might be used: traditional Public Works, Public-Private Partnerships (PPPs), Works for Taxes (Obras por Impuestos, or OxI at http://www.obrasporimpuestos.pe), and Government-to-Government (G2G) agreements.
From January to September 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 determination to award the projects.
PPPs allow for the participation of private investors in public infrastructure projects and/or services derived from them, either in the construction, operation and maintenance stages of a project or only in the 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. At the end of the contract, the property is transferred to the government. A full listing of PPP projects can be viewed at the Peruvian Private Investment Promotion Agency’s (ProInversion) website. Additionally, many governments finance public works projects through borrowing from the Multilateral Development Banks. Please refer to “Project Financing” Section in “Trade and Project Financing” for more information.
The Project Pipeline (2021 – 2022) under the PPP mechanism includes a total of 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).
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%). 79% of national roads (21,434 km) are paved, while only 13% (3,623 km) and 1.7% (1,859 km) of the departmental and local roads, respectively, are paved. In total, 141,557 km (86%) of roads were unpaved according to 2018 data, a component of the transport infrastructure gap.
There are 30 telecommunications companies that transmit telephone, internet, and television signals through Peru’s fiber optic network, which spans 13,500 km (3,883 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, while within Lima Metropolitan Area 95% and in the rest of the country 89%. As of 2020, only 40.3% of households nationwide have access to internet service. Peru has experience with private participation in the telecommunications sector. Many of the awarded projects are now in operation, including the concession of high-speed Internet broadband. The Peruvian government is planning on holding a 5G spectrum auction in the first half of 2022.
The water sector in Peru is managed by the municipalities which generally have difficulty managing their water utilities. The infrastructure gap in water and wastewater sector is $15 billion and the Government of Peru has stablished a strategy to simplify the lines to close it - the main goal is the simplification of processes and regulations that impact investment, financing and management.
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, the COVID-19 crisis has slowed, if not stalled, progress on many infrastructure projects. Even in normal times, half-finished infrastructure projects are a common sight 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 is done in the United States).
Key Industry Events
Excon 2022: Place & Date t0 be determined
Organized by the Peruvian Chamber of Construction (CAPECO).
Expo Agua: Main water expo in Peru organized by Water Competency Center
Oct. 27 - 29 2021 In Person edition, Lima, Peru
Oct. 27 – Nov. 26 2021 Virtual edition 2021
Business Monitor International Research
Ministerio de Vivienda, Construccion y Saneamiento
National Institute of Statistics and Informatics— I (http://www.inei.gob.pe/ ) EI (Spanish)
Obras por Impuestos (http://www.obrasporimpuestos.pe)