PPP investments in highways will exceed US$5.4bn

By ProInversion

March 27, 2023

This is a machine translation of the original press release issued in Spanish

The Agency for the Promotion of Private Investment (PROINVERSIÓN) reported that the highway concessions to date have involved a total investment commitment of US$5,449 million, having executed 88%, that is, more than US$4,800 million, which have allowed improvements in the service levels and quality of the country's main interconnection routes.

The concession scheme through the PPP allows the State to build, finance, maintain and renew the infrastructure during a determined period of time. To date, there are 16 concession contracts with an average term of 23 years. Of these, six (6) projects have been self-financed and 10 co-financed.

The total number of highways intervened is 6,693 km, which is equivalent to about 23% of the National Road Network. The investments made through these 16 concessions have made it possible to improve regional interconnectivity, reduce travel costs and times, boost product logistics chains, and promote tourism, considerably reducing the number of traffic accidents on concessioned roads.

A clear example of time reduction is the case of the IIRSA Sur Section 2 (Urcos-Inambari) that reduced travel time by 4.5 hours, benefiting more than 1.8 million people; Similarly, the IIRSA Sur highway Section 4 (Azángaro – Inambari) reduced travel time by about 10 hours, connecting more than 1.5 million people; and the IIRSA Sur Section 5 (Puno-Ilo) reduced the time by 4 hours, connecting 2.6 million people.

There are 14 roads with service level measurements by the Public Use Transport Infrastructure Supervisory Body (OSITRÁN), of these, all have been complying with maintaining the committed service levels, such as the state of pavement, condition of drainage, state of signals and circulation quality, exceeding the minimum threshold of 95%.

The PPP scheme has generated fewer cost overruns and delays than traditional public works. According to the IDB study, the concessioned highways reduced the average lead time, in the construction stage, by approximately six (6) months. In addition to improvements in times, the concessioned highways have generated cost savings, in line with what is observed in Chile and Colombia.

The self-financed concession roads have also generated significant fiscal savings for the State. In addition to not requiring the use of public funds, in self-financing highways there are funds that are channeled to the State. Thus, in 2019, the concession of Red Vial N° 6 contributed 18.61% of the toll income and Red Vial N° 5 contributed 5.50%, which are allocated to a road fund, prior decision of the grantor. Until 2019, the fund managed to accumulate S/ 190 million.

PROJECTS IN PORTFOLIO

The outlook for new highway concessions is favourable. PROINVERSIÓN currently has two (2) road projects in its portfolio for more than US$3.3 billion. These are the projects Anillo Vial Periférico (US$ 2,380 million) and the Longitudinal Highway of the Sierra Section IV (US$ 929 million).

The Peripheral Road Ring will be a 34.8 km long highway that will efficiently interconnect the main regional transportation axes of Lima: Panamericana Norte, Carretera Central, Panamericana Sur; as well as a better connection with the Jorge Chávez International Airport and the Port of Callao .

The project includes, in addition to the 34.8 km long, six-lane highway at asphalt level, two tunnels with vaults (2.29 km and 1.93 km, respectively, with three lanes each), bridges, viaducts, overpasses and road interchanges. . The declaration of interest is scheduled for the II Quarter of 2023.

For its part, the Longitudinal Highway of the Sierra Section IV, contemplates the design, financing, construction, operation and maintenance of 965.2 km of highways. The Operation and Maintenance will comprise Routine Maintenance, Periodic Maintenance and Operation of tolls, weighing and mandatory services that ensure trafficability, meeting service levels and promptly responding to any road emergency that occurs during the Concession period. The relaunch of the project is scheduled for this month and its awarding for the first quarter of 2024.