Peru Road Transport Concessions

Overview

The Peru Road Transport Concessions library is intended to provide a convenient base of information for use by public and private groups investing in infrastructure development, and by USAID and other donors in designing interventions to assist governments and investors in designing and executing concession strategies. It provides an overview of concessions, and detailed account of three cases in Peru: two road concessions and a port upgrade. The library is not intended as a “how to” manual, nor to establish “models” to be replicated; rather, it is a tool to inform other infrastructure activities.

Background

USAID’s Foreign Assistance Framework gives new attention to the importance of collaboration with host governments to create enabling environments that foster economic growth. Highlighting this approach was an effective program supported by USAID/Peru through the Poverty Reduction and Alleviation Project (PRA), which was amended in 2003 to promote Public Private Partnerships (PPPs) for infrastructure.

A consulting firm team from Chemonics, funded by USAID, worked with the Peruvian Agency for the Promotion of Private Investment (PROINVERSION), the Ministry of Economy and Finance (MEF), the Ministry of Transport and Communications (MTC), and the regulator of transport (OSITRAN), on three private concessions: two roads and a port in Peru. The roads are among the longest private concessions negotiated in Latin America, and the first under the Initiative to Promote Integration in South America through Infrastructure (IIRSA). The concession to permit private operation of a part of the Port of Callao was an objective unrealized by other donors, including the Inter-American Development Bank (IDB), for decades (Japan funded the original feasibility study).

After the Peru Northern Highway project received international commendation when featured in Project Finance magazine as the Latin American Bond Project Deal of the Year 2006, Juan A. B. Belt (Director I&E) visited Peru in December of 2006, funded by the World Bank, remaining two extra days in Lima to examine USAID’s work on transport concessions. His findings support the hypothesis that USAID can be very effective at achieving development outcomes in infrastructure when the Agency promotes improved regulatory systems, including regulation by contract, to encourage private investment. Additionally, he explains why USAID is often more effective than other donors, particularly multi-lateral development banks (MDBs), at promoting economic reform. The successes achieved by USAID/Peru in promoting these concessions leveraged approximately $1 billion dollars with $8 million in USAID expenditures, demonstrating USAID’s effectiveness in promoting improved policies.

Following Dr. Belt’s visit, James Fox, in collaboration with the USAID Infrastructure and Engineering office’s Engineering Services team, including Jacob Greenstein, drafted a series of four papers that closely examine the lessons learned from these projects.

These documents collectively serve as a knowledge resource for those designing projects and working with host governments on legal and policy issues, with valuable information for those engaged in infrastructure activities inside or outside of Latin America.

Presentations

References