Peru's infra sector remains stuck in a vicious cycle

Peru is failing to close infrastructure gaps despite government decrees and regulations meant to facilitate progress.

A total of 2,256 projects involving investments of 36.1bn soles (US$9.69bn) were halted in the first half, with 17.2bn soles pending execution, according to a report by the comptroller general.

See the report in the Documents box in the top-right corner of the screen.

In Q1, the comptroller registered 2,324 paralyzed works involving 33.1bn soles, up from 1,746 and 22.9bn soles a year ago, when climate phenomena posed much bigger threats.

While the number of projects fell in the quarterly comparison, the investments involved increased, suggesting better monitoring of works in progress is needed.

Of the total, 494 projects were paralyzed in H1 due to breach of contract, 484 due to lack of financial resources, 147 because of legal discrepancies and arbitration, and 102 due to social conflicts. The rest were affected by technical deficiencies, climate events or simply abandoned.

In Q2, 447 projects involving 2.43bn soles were unblocked, but 379 with total capex of 5.57bn soles remained halted. Some of the stalled projects, like treatment plants or roads, imply high social costs and long-term consequences.

Peru's infrastructure deficit by 2039 amounts to 363bn soles.

Of the halted works, 182 registered progress of 20-30%, with 4.92bn soles pending execution, 534 progressed 50-70% with 3.14bn soles pending and 513 advanced at least 80%, with 1.34bn soles pending execution.

The most advanced projects could be unblocked relatively easily if local governments received the necessary funds and allocated them effectively.

REGIONS

With 321, Cusco reported the most halted projects in June – up from 302 in March – for 2.11bn soles and pending execution of 784mn soles. Puno followed with 266, down from 288, involving 1.56bn soles and 742mn soles pending.

La Libertad registered 74 halted projects involving 5.31bn soles, of which 3.61bn soles are pending execution. Arequipa reported 107 for 4.15bn soles and 2.24bn soles pending.

Lima region reduced the number of paralyzed projects from 180 to 168, but the ones that were halted involved higher investments, rising from 3.17bn soles to 3.56bn soles, while investments still to be executed rose from 976mn soles to 1.18bn soles.

RESPONSIBLE

Of total projects halted, 632 involving 10.7bn soles corresponded to the communications and transport sector, as 46 were overseen by the national government, 82 by regional governments, and 504 by local administrations.

In the construction and water sector, 492 involving 6.63bn soles were stalled, 76 overseen by the national government, 47 by regional governments and 369 by local administrations.

Energy and mining reported 73 stalled projects for 396mn soles, and the rest were in the education, agriculture, health and other sectors.