Peru to Seek Private Investors for $10.4 Billion Projects

Peru will auction concessions for $10.4 billion in infrastructure projects by the end of next year as it seeks to benefit from an upturn in investor confidence, Finance Minister Miguel Castilla said.

The government will seek private industry involvement in 26 projects, including roads, power plants and a $3 billion subway for Lima, Castilla told reporters in the capital today.

Peruvian business confidence rose to a one-year high in February as Europe’s debt crisis eased and the U.S. economy strengthened. The improved global outlook will spur foreign investment, helping the government meet its target of 6 percent annual growth, Castilla said.

“Delivering $10 billion of concessions in less than two years is a very ambitious goal,” he said. “Together with the fiscal stimulus, this investment will keep the country growing at elevated rates.”

The sol was little changed at 2.6700 per U.S. dollar at 11:16 a.m. in Lima, from 2.6710 yesterday, according to Deutsche Bank’s local unit.

The Andean nation is boosting investment in roads, electricity and energy as it seeks to cut the country’s 30 percent poverty rate and increase exports to $86 billion by 2016 from $46 billion last year.

Concessions totaling $1.5 billion will be offered this year, beginning in May with a license to build a power plant for the central and southern jungle region, Castilla said.

The license to design, build and operate the 35-kilometer Lima subway, which the government initially estimated to cost $2 billion, will be auctioned about the middle of next year, he said.

Companies will provide about 40 percent of the financing for the 26 projects, said Milton Von Hesse, head of the government’s private investment promotion agency, Proinversion. The energy projects will probably be financed entirely by investors, while the government will provide a “very important” portion of financing for the subway, he said.

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.

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