Peruvian Infrastructure - The 100 Billion Dollar Question

Peru has more than $100billion worth of potential infrastructure projects planned between now and 2021 yet it remains to be seen how many of these will be executed. LatAm INVESTOR investigates…

This year Peru is everywhere. Mexico City, Sao Paulo London, New York and Beijing are just some of the world capitals being visited by the Peruvian Roadshow in 2015. The reason for the incessant travelling? Peru has a massive infrastructure programme underway and it desperately needs international investors to make it happen.

International appeal

Peru wants international investors for two reasons, explains Carlos Herrera, Executive of ProInversion, the country’s investment agency. “One reason is obviously the capital. These are huge projects that the country can’t finance on its own. But the second factor is the expertise and transparency that private sector companies can bring to these projects.” Indeed Peru is using a PPP model that sees consortium of private-sector players undertake the projects before eventually handing them back to public ownership.

"If British firms and investors want to profit from Peru’s infrastructure drive they need to start looking for opportunities now…"

Carlos Herrera, Executive Director of ProInversion, has been racking up the airmiles...

Research from Peru Top Publications estimates that there are 392 PPP projects, currently under some stage of evaluation, that could potentially be awarded before 2021. It’s believed the total value of these projects is $107billion. Of course experienced infrastructure investors know that there is a big difference between planning a project and making it happen. Yet this year alone ProInversion will award more than $4billion of definite projects. These are mainly centred around hydro electric energy and conventional thermal power plants. Though there are also some less conventional projects, such as a wide roll-out of broadband. In the following years transport works, hydrocarbon infrastructure and public service deals will also be awarded.

Asian interest

“We have great potential in many parts of our economy”, says Herrera, “yet they will only be successful if we have the right infrastructure to support them.” And that’s why ProInversion has just completed a whistlestop tour of Asia. In less than a week it held conferences in Beijing, Tokyo and Seoul, speaking to hundreds of Asian corporations and investors about the opportunities in Peru. “I can’t give specific names for confidentiality reasons but we have spoken to Asian companies that are ready to invest in Peru.”

This Asian interest is good news for Peru and surely some justification for ProInversion’s globe trotting strategy. Yet it’s also a reminder – perhaps even a warning – to UK plc. Peru’s infrastructure is throwing up an array of opportunities but that’s not going unnoticed by the rest of the world. If British firms and investors want to profit from Peru’s infrastructure drive they need to start looking for opportunities now. And given that the Peru Roadshow will visit London in July – this could be the perfect time to do it.