Peru to push for southern port, railway projects

The Peruvian government aims to spur port and railway infrastructure projects near its southern borders with Chile and Bolivia, President Pedro-Pablo Kuczynski said.

A port in Tacna region would only be feasible if it can link up to the bi-oceanic railway project, Kuczynski said after inspecting the Tacna-La Paz highway project that is scheduled for completion in March 2018. The government also aims to accelerate investment in the Majes-Siguas irrigation project, he said.

The southern Peruvian natural gas pipeline will go hand-in-hand with a project to extend the use of gas in Tacna, Juliaca, Puno, Arequipa and Moquegua regions, Kuczynski added. Sempra and Argentina's Techint agreed to buy Odebrecht's stake in the pipeline last week, which will help get the delayed project moving, he said.

"We're going to promote the big projects that will bring prosperity to this area of Peru," Kuczynski told reporters in the coastal city of Tacna, according to government newspaper El Peruano. "The world's economy has slowed. We have to generate our own resources."

Other projects include a potential concession for a new port in Chimbote in Áncash region, Kuczynski said.

He added the 130-member congress has cooperated with his government on several key pieces of legislation in addition to giving his cabinet a vote of confidence during his first month in office. Kuczynski's Peruanos por el Kambio movement has just 18 seats in the legislature.

In other infrastructure news, the government plans to allocate up to 2.5bn soles (US$800mn) for potable water projects over the next 18 months, Kuczynski said, according to state news agency Andina. About 10mn Peruvians lack running water services, says the housing and construction ministry.

Kuczynski, who took office July 28, has pledged to work to eliminate all bureaucratic obstacles to US$25bn in delayed infrastructure projects within six months.

The previous government awarded a record US$20bn in public-private partnership infrastructure concessions, but bureaucratic issues and social conflicts have delayed tens of billions of dollars in projects, according to industry groups such as SNMPE and AFIN.

GDP

The finance ministry, meanwhile, raised its GDP growth forecast to 4% this year from an earlier estimate of 3.8% due to a 20% jump in mining output and a 9% increase in public spending. The economy is now expected to expand 4.8% in 2017, 4.3% in 2018 and 4.1% in 2019, according to the ministry.

Banks such as Banco de Crédito del Perú (BCP), however, warned private investment is declining as the mining industry has completed large-scale copper projects such as China Minmetals' US$8.3bn Las Bambas mine and Freeport-McMoRan's US$4.6bn expansion of its Cerro Verde operation.

Private investment fell for a 10th straight quarter, contracting 4% in the second quarter, and accounted for just 18.8% of GDP, a five-and-a-half year low, according to BCP.

"Most non-mining investment came in fuel refining, electricity, mass consumption and cement plants," Luis Ortega, an analyst at the bank, wrote in a report. "This didn't compensate for the 44% drop in mining investment linked to the culmination of mining projects such as Las Bambas and the Cerro Verde expansion."​

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