CAF approves US$80mn loan for Peru's Majes project

Caracas-based multilateral lender CAF said it approved an US$80.8mn loan for the second stage of Peru's Majes-Siguas irrigation project.

The loan will help finance the US$550mn project's Angostura dam and other hydraulic works in Arequipa region, channeling water from the Apurímac river, CAF said in a statement.

Majes-Siguas II, awarded in 2010 to Spanish construction firm Cobra Instalaciones and Peru's Cosapi, is designed to irrigate 38,000ha of land, creating 146,000 jobs, the release said. The first stage of Majes, which involves 23,000ha of arable land, has been operating since 1990.

The central government will finance 70% of the project, which is designed to boost exports of grapes, avocado pears, artichokes, asparagus, paprika and chili peppers, while the remainder will be funded by Arequipa's regional government.

"This operation consolidates CAF's position as the main financier for the irrigation infrastructure sector in Peru," bank president Enrique García said in the statement.

CAF is also providing financing for the US$825mn third stage of the Chavimochic project in La Libertad and the US$600mn Olmos project in Piura, which was inaugurated in November 2014.

The government is seeking to accelerate large-scale irrigation projects to counter the effects of global warming and the El Niño weather phenomenon on agriculture. Peru, the world's largest exporter of asparagus, organic coffee, organic banana, oregano and paprika, had over US$5bn in agro-exports last year.