Peru: Expanding port infrastructure
Developments at Peru’s maritime ports continue, with the award of the concession for the General San Martín Port Terminal in Pisco scheduled for later in 2013 and an expansion of the northern terminal in Callao moving forward. While these upgrades will likely spur investment, government policies and actions aimed at keeping afloat the state-owned operator, the National Ports Company (Empresa Nacional de Puertos, ENAPU), have drawn criticism from industry leaders.
According to Proinversión, the agency that promotes private investment, the concession winner for the General San Martín Port Terminal will undertake the design, financing, construction, operation and maintenance of the facility for 30 years. The estimated award date for the tender is the third quarter of 2013.
In January, the head of the project for Proinversión, Giancarlo Villafranqui Rivera, told OBG that while the port is only medium-sized, he expects to see “substantial growth”. This already appears to be happening – National Port Authority data show that 86,897 metric tonnes of cargo moved through General San Martín in April 2013, up from 22,559 metric tonnes the prior year, an increase of nearly 300%.
For much of last year, there was debate surrounding ENAPU’s potential involvement in the General San Martín project. Some industry leaders remarked that the state company, which the private sector perceives as inefficient, should not be allowed to participate in concessions.
But in January 2013, it was announced that the winner of the General San Martín concession would be required to enter into a joint venture with ENAPU, with the state-owned entity providing land and assets in return for a fee paid by the concessionaire.
ENAPU is already working with the concessionaire for the Muelle Norte section of the Port of Callao, APM Terminals. The Dutch operator agreed to pay 17% of its profits from the port to ENAPU and was obligated to hire 60% of the state company’s local operations staff.
Despite this arrangement, APM seems to be doing well. According to data from the National Port Authority, container traffic at the Muelle Norte facility increased from 24,067 twenty-foot equivalent units (TEUs) in April 2012 to 40,277 TEUs one year later.
APM also has plans to expand the terminal, recently announcing a project to double its annual capacity to 1.6m TEUs, for which it has already raised $217m from the International Finance Corporation, the Entrepreneurial Development Bank of the Netherlands and three other European agencies.
APM’s ability to source financing suggests an overall positive outlook for Peru’s ports, which saw container traffic rise by 31% between 2008 and 2011, according to Word Bank data.
New sources of demand mean this upward trend is likely to continue. The Bolivian Chamber of Heavy Transport recently announced plans to build new roads to ports in southern Peru. Most Bolivian shipments leave from Chilean ports, but political tensions between the two countries’ leadership is pushing Bolivia to search for alternatives.
Meanwhile, leaders from Brazil’s poultry industry are considering Peruvian ports as a potential gateway to Asia. This would entail first trucking the poultry coast to coast along the recently completed Interoceanic Highway.
Apart from concerns related to the ongoing global economic slowdown, one factor that could cool investors’ excitement for Peruvian ports is a recent legislative proposal that would declare the development of ENAPU to be a “national interest”. This law would “prioritise income and profits for ENAPU in the infrastructure and ports under its control.” Representatives of business interests have been critical, with the Peruvian Trade Association, COMEXPERU, saying the private sector should assume responsibility for port investments.
This draft legislation is similar to another recent proposal that would have allowed Petroperú, the state-owned oil and gas company, to acquire the local downstream operations of Repsol, a Spanish firm. This plan elicited such a negative reaction from both the private and public sector that it was eventually abandoned. Defeat of any legislation that strengthens ENAPU’s role in the ports is an outcome that business leaders would likely prefer to see.