China's Sinohydro wins Peru Amazon waterway concession

A consortium led by Chinese firm Sinohydro won the bidding for Peru's Amazon waterway concession, the first major public-private infrastructure project (PPP) to be awarded by President Pedro Pablo Kuczynski's government.

Sinohydro and Peruvian partner Construcción y Administración (Casa) offered to invest US$95mn in the 20-year concession known as the Hidrovía Amazónica, state private investment promotion agency Proinversión said in a statement. The consortium beat out a rival bid by Jan de Nul NV of Belgium and China Communications Construction, it said.

The concession involves an annual payment of US$24.4mn over the five years after construction work is finished and annual maintenance payments of US$17.8mn once in operation, Proinversión said.

The project will help boost trade by reducing costs and risks for passenger and cargo traffic along a 2,600km waterway linking the Amazon, Marañón, Huallaga and Ucayali Rivers, cabinet chief Fernando Zavala said. About 1.1mn local residents use the waterway.

A dredged navigation channel and GPS services will enable boats to journey safely between the jungle cities of Iquitos, Pucallpa, Yurimaguas, Saramiriza and the Brazilian border in the July-October dry season, Zavala said. The government plans to award another 12 co-financed infrastructure projects in the jungle region this year, he added, without providing details.

"This route will contribute to the development and progress of communities in the Peruvian jungle who will be able to ship their products with greater ease," Zavala said in broadcast comments at the auction. "This a clear example of a win-win situation for everyone."

Eleven ministries were involved in prior consultation talks with over 400 indigenous villages and secure 40 community agreements prior to holding the bid round, transport and communications minister Bruno Giuffra said at the ceremony.

The investment commitment came after Kuczynski visited China last September and hosted the Asia-Pacific Economic Forum (APEC) summit in November, an event attended by leaders including China's Xi Jinping.

While Chinese firms such as China Minmetals, Chinalco, Shougang and CNPC have invested heavily in Peru's commodities industries over the past decade, Kuczynski has set out to court investors from China to build infrastructure projects in Peru, including the Barranca-Ica railway.

Sinohydro, which is expanding its footprint in the Andean region including Colombia and Venezuela, adds the concession to hydroelectric projects in Ecuador and Bolivia.