Interview : Alberto Ñecco
What are ProInversión’s four strategic pillars?
ALBERTO ÑECCO: We have identified four strategic pillars that are crucial in both our long and short-term execution plans. First, we must strive to become a centre of excellence in terms of advising the government in the formulation and structuring of public-private partnership (PPP) projects. To achieve this, it is critical we work with highly trained and experienced consultants, and rely on standardised contracts that provide the market with a degree of predictability.
The second major focus is to promote private investment where social and environmental concerns are a priority. We have identified the importance of efficient social and environmental management in guaranteeing sustainable, bankable projects that are beneficial to society in general, and the population of Peru in particular.
The third pillar concerns our commercial strategy: ProInversión has been applying an orderly, organised methodology to identify, segment and attract potential investors, and the institution’s commercial intelligence is designed to attract and retain the right investors for each project. To this end, we will continue to participate in local and international roadshows, as well as utilise digital tools to keep attracting first-rate investors that are highly committed to the development of our economy.
The fourth pillar involves the institution’s focus on organisational efficiency in order to offer the best possible working conditions and attract highly skilled human capital to the organisation.
How can the infrastructure gap be closed, and what are some of the most important projects?
ÑECCO: The main challenge facing Peru in its efforts to guarantee GDP growth in the coming years is bridging its $160bn infrastructure gap. As the state’s investment bank, ProInversión specialises in promoting large-scale PPPs and asset-based projects. It is worth noting that, through the PPP mechanism, the country has been able to promote investments that have reached $30bn since the 1990s.
Considering that the state’s capacity to execute public works is limited, and that 80% of investment in Peru is private, the private sector will need to play a fundamental role. For this reason, we have developed relationships with various advisors with proven experience, as well as some of the most recognised infrastructure companies on a global level. An example of this is the extensive market interest displayed in the Michiquillay project, a $2.5bn mining development that counted Goldman Sachs as its transaction advisor and was awarded to Grupo México in the first quarter of 2018.
There are many exciting projects to come over the 2018-20 period. There is a roughly $11bn infrastructure pipeline for these years, and that is without including significant mandates, particularly in the transport, and water and sanitation sectors. These mandates will be given to ProInversión in the months ahead, and could bring the pipeline to over $20bn. Three of the most relevant infrastructure investments will be made in the hydrocarbons, transport, and water and sanitation sectors.
In the hydrocarbons sector, one of most interesting projects is the Mass Use of Natural Gas – a distribution system made up of a natural gas grid in the regions of Apurímac, Ayacucho, Huancavelica, Junín, Cusco, Puno and Ucayali. This $400m downstream project will be awarded in the last quarter of 2018.
Furthermore, in the transport sector, the Huancayo-Huancavelica Railway stands as an attractive project, with an estimated investment value of $235m. This PPP will be awarded during the first half of 2019. In the water and sanitation sector, meanwhile, the Headworks and Conduction for the Drinking Water Supply in Lima project is valued at around $700m and will also be awarded in 2019.
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