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Important Urgency Decrees issued in January

On January 8, 2020, the Peruvian Government published the Urgency Decree N° 003-2020 to establish extraordinary measures for the acquisition and liberation of the lands needed for the execution of projects included in the National Infrastructure Plan for Competitiveness and Productivity ("NIPCP") and the Integral Plan of Reconstruction with Changes ("IPRC").

Among the most relevant measures the decree states that the authority in charge of a project shall identify the required lands and register in the corresponding registry entries that the lands are destined for the execution of investment projects. The registration will be valid for 5 years.

The required lands may not be subject to sanitation, urban enablement, zoning qualification changes nor building authorizations or licenses, unless they are necessary improvements for the execution of the projects.

On the other hand, on January 24, 2020, the Peruvian Government published the Urgency Decree N° 020-2020, which modifies the Peruvian Arbitration Law in those cases where the Peruvian Government is a party in the controversy. The most relevant amendments are the following:

  • The arbitration must be institutional. The arbitration could only be ad hoc if the amount in controversy does not exceed 10 tax units (USD 12,721.9). 
  • When the Peruvian Government is affected by the imposition of precautionary measures, the other party shall present a guarantee bond letter in favor of the Peruvian Government, which must be in force until the arbitration ends. The judge or arbitral tribunal shall set the amount of such bond letter. 
  • The abandonment of the arbitration shall be declared if there is no act that drives the process for 4 months. The declaration of abandonment prevents a new arbitration for the same claim for 6 months.
  • The arbitral writs and the award are public once the process ends.

PERUPETRO announces the tender of 6 oil blocks

By 2023, PERUPETRO expects to produce 100,000 barrels of oil per day and execute 44 exploration agreements. In order to achieve such goals, PERUPETRO is working on launching an early bid this year for six oil blocks whose agreements are ending soon: blocks I, VII, X, XV (onshore) and Z-2B (offshore) on the northeastern coast, and block 8 (onshore) on the northern rainforest. The awarding will be done on a greater working program basis rather than a higher royalty.

Government Announces New Forest Tender

The National Service of Forestry and Wildlife (SERFOR) has announced that as of April 2020 it will call for a public tender to grant forest concessions (for timber, non-timber forest products, ecotourism and conservation purposes) over 15,000 hectares of Amazon lands.

This promotion measure intends to stop and prevent deforestation in the Amazon, by awarding investors the right to exploit forest resources in a sustainable manner. For such purposes, SERFOR will request that the investors prove long-term technical, economic and financial solvency.

SERFOR assures that the investments in the Forestry Sector will increase its contribution to the GDP from 0.17% to 4.5 or 5% in next 15 years.

 

CURRENT PUBLIC PROJECTS

OIL AND GAS
BIDS IN PROCESS

Natural Gas System: ProInversion called for a public tender to grant a 32-year concession for the designing, financing construction, operation and maintenance of Distribution System of Natural Gas Pipeline Network, which will be extender throughout the Apurimac, Ayacucho, Huancavelica, Junin, Cusco, Puno and Ucayali regions. The estimated investment for this project is USD 200 million, and the project is expected to be awarded in the first semester of 2020.

ProInversion announced that there are three pre-qualified bidders: Calidda (current natural gas utility for Lima - Callao), Wapsi Peru consortium (composed of LNG Holding and China Gezhouba Group Company Limited) and Yacimientos Petrolififeros Fiscales Bolivianos - YPFB.

TRANSPORTATION
BIDS IN PROCESS

Longitudinal de la Sierra Road Project - Section 4: ProInversion called for a public tender to grant a 25-year co-financed concession for the construction, operation and maintenance of Section 4 Longitudinal de la Sierra Road (Junin, Huancavelica, Ayacucho, Apurimac and Ica), with an estimated length of 970 km. The estimated investment for this project is USD 464 million, and it is expected to be awarded during the first semester of 2021. 

Huancayo - Huancavelica Railroad: ProInversion called for a public tender to grant a concession for a co-financed project that consists of the rehabilitation works, operation, administration and maintenance of the infrastructure. The Huancayo - Huancavelica train line is approximately 128 km long and will connect Huancayo with Huancavelica, as well as interconnect with the national train system between Huancayo and The Port of Callao. Third parties have until January 24, 2020 to present their comments and suggestions to the final version of the concession agreement. The estimated investment for this project is USD 227 million. ProInversion expects to grant this concession during the first semester of 2020. 

POTENTIAL PROJECTS

Longitudinal de la Sierra Road Project - Section 5: ProInversion will grant a co-financed concession for the construction, operation and maintenance of Section 5 Longitudinal de la Sierra Road, with an estimated length of 442 km. The estimated investment and awarding date have not yet been defined. 

Lima-Ica Commuter Rail ("Tren de Cercanias"):
Private parties had until May 2019 to present Co-financed Unsolicited Proposals for the execution of this Commuter Rail, which shall connect Lima City with Ica Region. China Railway was the only company submitting a proposal; however, it failed to comply with the observations formulated by Proinversion. 
Therefore, the Peruvian Government has decided to tender this project as a Co-Financed PPP. For such purpose, the pre-investment study is currently under development.

The 560 km Commuter Train will include the supply of cutting-edge rolling stock for the provision of cargo and passenger transportation services, and aims to connect the following infrastructures:

  • Basic Lima and Callao Metro network
  • Logistic platforms
  • Port terminals in El Callao
  • Port terminal of San Martin-Pisco 

According to Ministry of Transportation and Communications, the Commuter Train will represent an investment higher than USD 3,106 million. On December 11, the Peruvian Government signed an agreement with a Consortium (China Railway, Creec Peru, Vitrubio Ingenieria and Fynsa Ingenieros) for the elaboration of a pre-investment study of the project. Once the study is complete ProInversion will call for a public bid to grant the project.

ELECTRICITY
POTENTIAL PROJECTS

500 kV Piura Nueva-Frontera Substation Transmission Line: During the first semester of 2020, as part of the Peru-Ecuador Interconnection, ProInversion will call for a public bid to grant a concession for the construction, operation and maintenance of a 500-kW transmission line to connect the Chorrillos Substation in Ecuador with La Niña Substation in Peru. The estimated investment for this project is USD 113 million and it is expected to be awarded in the second semester of 2020.

138 Kv Puerto Maldonado - Iberia - Valle del Chira Transmission Line: During the second quarter of 2020, ProInversion will call for a public bid to grant a concession for the design, financing, construction, operation and maintenance of this project. The estimated investment for this project is USD 24 million, and it is expected to be awarded in the second semester of 2020.

220/60 kV New Chincha Substation and 220/60 kV New Nazca Substation: During the first quarter of 2020, ProInversion will call for a public bid to grant a concession for the design, financing, construction, operation and maintenance of these projects. The estimated investment for these projects is USD 30 million, and it is expected to be awarded in the second semester of 2020.

SANITATION
POTENTIAL PROJECTS

Main Works and Distribution of Drinkable Water Supply for Lima: During the third quarter of 2020, ProInversion will call for a public bid to grant the concession for the design, financing, building, operation and maintenance of: (i) the extension of the Pomacocha and Huallacocha Bajo dam (approximately 100 MMC); (ii) diversion works in Pomacocha–Rio Blanco (approximately 10 kilometers of trans-Andean tunnel); (iii) a water purification plant (5 m3/s); and (iv) the Ramal Sur distribution pipeline (approximately 25.6 kilometers). The estimated investment for this project is USD 720 million and it is expected to be awarded during the first semester of 2021.

Sewage Treatment System for Puerto Maldonado: During the second quarter of 2020, ProInversion will call for a public bid to grant the concession for the design, financing, building, operation and maintenance of this project. The estimated investment for this project is USD 20 million and it is expected to be awarded during the first semester of 2021.

Opportunities for Co-Financed Unsolicited Proposals in Sanitation

By means of Supreme Decree N° 016-2019-VIVIENDA, private investors submitted Co-financed Unsolicited Proposals for sanitation projects in Loreto, Northern Lima, Huancavelica, Apurimac and Moquegua.

The investment needs identified by the Peruvian Government were the following:

  • Sanitary sewage services and wastewater treatment in the city of Iquitos (Loreto) (improvement and expansion) 
  • Wastewater treatment service in the urban area of Huaura (northern Lima) 
  • Wastewater treatment service in the urban area of Barranca (northern Lima)
  • Wastewater treatment service in the urban area of Huancavelica and Andahuaylas (Apurimac)
  • Drinking water service through the desalination of seawater in the urban area of Ilo (Moquegua)
  • Rural sanitation services in the Loreto region

These projects aim to improve the living conditions of residents in those cities who lack water, sewage and wastewater treatment services.

As a result, two groups of investors submitted Unsolicited Proposals, whose admission is currently under evaluation.

TELECOM
POTENTIAL PROJECTS

Operation and maintenance of Transport Networks: ProInversion will call for a public bid to grant concessions for the development of this project. This project comprise the integration of transport networks in 21 regions, and its operation and maintenance will be in charge of an operator, who shall also provide services to the operating companies of the access networks of the regional assets.

Creation of a communication network for integrated connectivity and social development in Loreto region: ProInversion will call for a public bid to grant the creation of a unique communications network for the Loreto region. The project will increase the access to internet service and will benefit 317 localities. It is expected to be awarded in 2021.

Radio Spectrum Bands: During the last quarter of 2020, ProInversion will call for a public bid to grant the project that seeks to expand the development of mobile broadband systems to improve the coverage and capacity of 4G and 5G technology data. The estimated investment for this project is USD 291 and it is expected to be awarded in the first semester of 2021.

TOURISM
BIDS IN PROCESS

Lima Convention Center: This project consists of promoting the participation of the private sector (operator) to be in charge of the operation and maintenance of the convention center, located in San Borja. The convention center will be 85,441 m2, with a capacity of 9,950 persons. It is expected to be awarded during the first semester of 2020. 
 
POTENTIAL PROJECTS

Improvement of tourism services in Choquequirao Archaeological Park, Apurimac and Cusco regions: ProInversion will call for a public bid to grant the concession for the design, financing, construction, operation and maintenance of tourist accessibility means to the Archaeological Park of Choquequirao. The estimated investment for this project is USD 221 million and it is expected to be awarded during the second semester of 2020. 

REAL ESTATE 
POTENTIAL PROJECTS

Ancon Industrial Park: ProInversion will call for a public tender to transfer a piece of land to create an industrial park. This project will be executed on a piece of land owned by the Peruvian state (PRODUCE), with an area of 13,382,257 m2, located between the 45th and 50th kilometer of the North Pan-American Highway, Ancon District, Lima.

The services to be provided by the Ancon Industry Park to the industrial companies operating in this space will be divided into four categories: basic services (sanitation, energy and telecommunications); ancillary services (maintenance, monitoring, cleaning, etc.); advanced services (centralized management, technological and business development, etc.); and collateral services (truck center). 

The estimated investment for this project is USD 500 million and it is expected to be awarded during the second semester of 2020. 

HEALTH
POTENTIAL PROJECTS

New Hospital of High Complexity in Chimbote: During the last quarter of 2020, ProInversion will call for a public bid to grant a concession for the design, construction, procurement, operation and maintenance of a healthcare center at the level of a High Complexity Hospital with care level II for the provinces of the Ancash Region. The hospital will have at least 108 beds. The estimated investment is USD 110 million and is expected to be awarded during the first semester of 2021.

New Hospital of High Complexity in Piura: During the last quarter of 2020, ProInversion will call for a public bid to grant a concession for the design, construction, procurement, operation and maintenance of a healthcare center at the level of a High Complexity Hospital with care level III for the provinces of the Piura Region. The hospital will have at least 342 hospital beds. The estimated investment is USD 144 million and is expected to be awarded during the first semester of 2021.