The commitment of Peru to meeting its transport and logistics needs is apparent in the FY 2019 budget. As part of this public spending programme the Ministry of Economy and Finance set aside PEN326.6m ($98.9m) for road, air and port infrastructure development, with plans to secure additional funds from the private sector. The largest share of the budgeted amount, PEN133.9m ($40.5m), will be channelled to the defence sector for projects including capacity expansion at the Callao air and naval bases, and improvements to the San Lorenzo Lima-Callao marines training base.

The next-largest portion of PEN96.4m ($29.2m) has been earmarked for road works within the Lima metropolitan area, while PEN18m ($5.4m) has been allocated to fund technical assistance to states in order to aid and promote private investment in public infrastructure. The remainder of the transport budget is for local governments in Lima’s districts of El Agustino, La Victoria, San Luis and Santa Anita for road improvement and expansion works. Outside of the federal budget, two major projects planned for execution in the short term are the expansion of Lima’s Jorge Chávez International Airport and a new metro line in the capital.

Project Sources

The 2019 budget for public expenditure totals PEN168.1bn ($50.9bn), an increase of 6.9% over 2018. While the government is prioritising education and health, allocating PEN30.6bn ($9.3bn) and PEN18.2bn ($5.5bn), respectively, another large line item is the PEN7bn ($2.1bn) earmarked for reconstruction works to repair the damage caused by severe flooding from the 2017 El Niño climatic phenomenon in the northern coastal region. A portion of that amount is reserved for rehabilitating transport routes. Nevertheless, such investment falls short of the country’s estimated $159.5bn infrastructure deficit, although much of that concerns housing needs. In November 2018 Moody’s Investors Services calculated that it will take Peru 10 years of an average annual investment of $15.9bn – which is equal to 7.5% of 2017 GDP – to close the infrastructure gap, and that doing so would contribute to the country’s development, increase its global competitiveness and elevate its level of wealth. Transport infrastructure has a major role to play in this regard. Beyond the government budget, ProInversión, Peru’s investment promotion agency, is another large source of funds for transport and other infrastructure works. The body has over 60 infrastructure projects in its portfolio to be developed in conjunction with the private sector as public-private partnerships (PPPs). Among the largest of these projects is the $1.5bn expansion of Jorge Chávez International Airport, which entails the addition of a new runway and passenger terminal. Those works, the contract for which was awarded to the Spanish company FCC Construction, the Italian industrial group Salini Impregilo and the US multinational AECOM, began in October 2018, with a targeted completion date of 2023 (see analysis).

Domestic Rail

Rail systems are seeing increased investment around the world due to their ability to lessen passenger vehicle traffic and keep freight trucks off the roads. Peru’s rail network currently extends over 1690 km and comprises three branches: the central line (Ferrocarril del Centro), the southern line ( Ferrocarril del Sur) and the south-eastern line (Ferrocaril Sur-Oriente). The authorities are aiming to add new arteries in the coming years, with the launch of public tenders under way. In February 2018 the Ministry of Transport and Communications (Ministerio de Transportes y Comunicaciones, MTC) began accepting tenders for pre-investment studies related to rail projects between Barranca and Lima, Lima and Ica, and San Juan de Marcona and Andahuaylas, as well as upgrades to the Chosica portion of the Ferrocarril del Centro.

According to a government statement from February 2018 the new domestic rail connections will ease traffic congestion, allow commuters to save fuel, time and expenses, and expand the country’s freight capacity. Bruno Giuffra, the former minister of transport and communications, told local media in February 2018 that the four projects aim to strengthen the country’s rail network by adding a combined length of 1136 km to serve the states of Lima, Ica, Ayacucho and Apurímac.

The largest of these is the 324-km Lima-Ica commuter railway, featuring 44 km of tunnels and 50 km of bridges and viaducts. The tender to design, finance and build the line is valued at approximately $3.3bn, with the resulting service set to boast a maximum speed of 200 km per hour and shorten the journey time between the two cities from five hours to about three. The MTC said the feasibility study for the Lima-Ica rail project will be carried out during 2019, as private companies submit their proposals for the route. Execution of the project is then expected to begin in 2020 and take a total of five years to reach completion.

Other rail works include an upgrade of the Huancayo-Huancavélica line, for which investment of $235m is planned. According to Rosa María Tejerina, project director at ProInversión, the undertaking is a co-financed state initiative that is expected to serve 1.2m passengers after rehabilitation works are complete. The route spans 128.7 km, and will include seven stations and 19 stops. By March 2019 three companies had qualified as bidders for the project, but it is anticipated that more will come on board before the pre-qualification process closes in December. The awarded concession will be for 30 years. Jorge Valverde, an investment specialist at ProInversión, told OBG that the Huancayo-Huancavélica rail project is a state priority, along with projects to increase the country’s port capacity. “We hope that these projects are well received by the private sector,” he said. “With the state having already approved a budget, it is a guarantee for private investors that the government will fund the projects.”

Intra-City Rail

As the country’s capital and most populous city, Lima is home to its own metro line. The system is operated by Ositrán, which is eight years into a 30-year concession. Line 1 – the only line currently operational of an envisaged six-line network – transports more than 470,000 people per day and runs 34 km through 11 districts. It is being upgraded throughout 2019 at an investment of $469m, which includes new entrances at five of the 26 stations, 20 new locomotives and 39 carriages to increase the line’s frequency from six minutes between trains to three.

Construction of Line 2 is scheduled to begin in 2019. The 35-km route is set to feature 35 stations and cross the capital from east to west, connecting the Ate district to Callao. Drilling work on the tunnels will begin in the first quarter of 2020, with the line slated to be partially completed in 2021 to coincide with the country’s celebration of 200 years of independence. The line is expected to be fully completed in 2024, according to Édmer Trujillo, the minister of transport and communications, and serve 2m of the capital’s inhabitants. The Line 2 project has been described by President Martín Vizcarra Cornejo as one of two “emblematic infrastructure projects” for Peru’s bicentennial, the other being the expansion of Lima’s Jorge Chávez International Airport, which Line 2 will serve. The consortium awarded the contract to execute the construction of Line 2 is composed of Spanish companies ACS and FCC, Italian firms Impregilo and Ansaldo, and the Peruvian company Cosapi. The total cost of the line is estimated at $6bn.


Also in the works is a feasibility study for a railway that spans the width of South America. In mid-2018 officials from Peru, Bolivia, Paraguay and Brazil met together to discuss building a railway linking Peru’s Pacific coast Port of Ilo with São Paulo on Brazil’s Atlantic coast in order to promote economic integration and ease the movement of goods. Depending on the chosen route, the rail line would have a length between 3800 km and 5300 km, and would require investment of up to $60bn.

While recent years have seen interest in the project grow among international development banks and European partners, the idea was first promoted by China in 2014. Chinese media reported in June 2018 that the China Railway Engineering Corporation plans to build a port in Ilo to complement mining operations there. However, Édgar Patiño, director of the National Ports Authority (Autoridad Portuaria Nacional, APN), said he was unaware of the proposal, and that any expansion project for the current port would be awarded via a public tender. He believes the Port of Ilo could be expanded to handle an anticipated increase in freight volume if the bi-oceanic railway was built.


The amount of cargo passing through Peru’s ports is already on the rise, recording annual increases since its three-year plateau in 2013, 2014 and 2015. In 2018 cargo volumes expanded by 4.4% to a total of 110.1m tonnes, with private cargo outweighing stateowned cargo at 58.3m tonnes. The largest categories of freight were solid bulk, which represented 39.9% of the total; liquid bulk (34.1%); and containers (21.9%), according to the APN. Peru is striving to further increase the volume of cargo it handles with various port expansion projects, such as that for the Port of Salaverry’s multipurpose terminal, which has an estimated cost of $229m. Local concessionaire Consorcio Transportadora Salaverry (CTS), part of Grupo Romero, signed a 30-year agreement in June 2018 to modernise and operate the port. Grupo Romero also operates the Port of Matarani in the south, where it completed a $280m expansion in 2016. Dredging works began at Salaverry in December 2018 to help lower water turbulence in the port’s interior, allow access for vessels with a keel depth of 12 metres, and improve the security of ships during their arrival and departure.

Between 2009 and 2017 the Port of Salaverry handled an annual average of 2.13m tonnes, but projections see this volume rising to 5m tonnes in the first 20 years of CTS’ concession. The expansion will therefore bring greater annual capacity, while enabling the port to better handle the export of agricultural products.

In April 2019 the regional government of Ancash announced that it will begin a technical and feasibility study for the design and construction of the Port of Chimbote, with a view to award the contract in early 2020. “We are awaiting expressions of interest from investors to launch a public tender in the second half of 2019 for the works at Chimbote, as was carried out with Salaverry,” Valverde told OBG. Investment in the port’s construction is projected to cost around $110m, according to the APN. Dredging is also planned for the Port of Paita, according to the port’s operator, Terminales Portuarios Euroandinos. The work will increase the facility’s depth from 13 metres to 14 metres.

Foreign Interest

In a major injection of foreign investment, January 2019 saw a branch of China’s largest shipping company, China COSCO Shipping, signed a $225m deal with Terminales Portuarios Chancay, a subsidiary of Peruvian mining company Volcán, to buy a 60% stake in the operation of the port terminal at Chancay. Located 58 km north of Lima, it is the Chinese company’s first port purchase in South America, allowing it to grow its shipping network and boost bilateral trade with Peru. COSCO and Volcán subsequently revealed plans to develop the facility into a $3bn multi-use port with two specialised terminals, a container port with 11 docks, and a four-quay terminal for grain and general cargo. Announcing the firms’ plans, President Vizcarra said the aim is to turn the port into a hub for the South Pacific, in conjunction with the Port of Callao near Lima.

Neighbouring states are also seeking greater involvement in Peru’s port infrastructure. In February 2019 Bolivia’s state-owned oil and gas company Yacimientos Petrolíferos Fiscales Bolivianos announced plans to invest around $100m in a liquefied natural gas (LNG) storage plant at the Port of Ilo to facilitate its gas exports to Asia. Some $300m is also planned for a 262-km LNG pipeline connecting Ilo with Charaña, Bolivia, on the border with Peru and Chile, in order to easily send gas to the port. A portion of this amount will be used to adapt the 188-km pipeline between the border town and Sica Sica, Bolivia.

In another sign of the international importance of Peru’s ports as export centres, German shipping line Hamburg Süd began running its seasonal shipments of mangoes and grapes from the Port of Paita to Philadelphia in the US in November 2017. The service has an 11-day transit time through the Panama Canal, occurring once weekly between November and February. The service allows the products to be shipped to other US ports such as Charleston, Houston and Port Everglades, as well as to Montreal and Toronto in Canada, via Hamburg Süd’s trans-shipment terminal in Cartagena, Colombia, which first launched in 2017.

Cruise Ships

In the passenger segment the APN announced plans in April 2018 to increase the country’s cruise ship arrivals by constructing a passenger terminal in Lima’s Miraflores neighbourhood. With work set to begin in the latter half of 2019, the $43m investment targets completion in 2021. The facility will feature two quays, a terminal building and car parking, and will allow cruise ships with a maximum length of 294 metres and 2000-passenger capacity to dock. Cruise ships currently dock in Callao, about 14 km from Lima, but such vessels lost priority to cargo ships after the port’s privatisation in 2010. A new cruise port is expected to facilitate the arrival of tourists visiting Peru’s sights. “A specific, purpose-built cruise terminal is indispensable to facilitating passenger growth at the Port of Callao,” Javier Lancha de Micheo, managing director at APM Terminals Callao, told OBG. “Through the separation of cargo and cruise traffic, the port will be able to expand its capacity for both types of vessels.”


Most tourists arrive to Peru by air, however, and high demand is driving change in this segment. Domestic and international air passenger traffic increased by 8.4% in 2018 to 37.3m people, while the number of flights grew by 1.4% to 485,355. Meanwhile, the total volume of cargo transported by air decreased by 3.3% to 320,094 tonnes, according to the Airports and Commercial Aviation Corporation of Peru, which manages 37 airports around the country. Jorge Chávez International Airport in Lima is managed by Lima Airport Partners, while another 11 – located in Anta/ Huaraz, Cajamarca, Chachapoyas, Chiclayo, Iquitos, Pisco, Pucallpa, Talara, Tarapoto, Trujillo and Tumbes – are managed by Aeropuertos del Perú.

The increase in passenger and flight volumes has led to plans to expand the country’s airport capacity, beginning with the enlargement of Jorge Chávez. “Lima’s airport handles 99% of international flights into and out of Peru. The terminal was originally designed for 10m passengers, but in 2018 it handled over 22m passengers,” Carlos Gutiérrez Laguna, general manager of Peru’s Association of International Air Transport Companies, told OBG. In addition to that undertaking, the government has earmarked $600m for the modernisation of eight regional airports in Jauja (Junín); Huánuco (Huánuco); Jaén (Cajamarca); Ilo (Moquegua); Nuevo Chimbote (Ancash); Rioja (San Martín); Tingo María (Huánuco); and Yurimaguas (Loreto) (see analysis).


Whether for tourists getting around the country after arriving at an airport, locals who prefer to travel by car or bus, or overland cargo hauls, Peru’s road network is fundamental to the country’s transport system. Peru has 78,000 km of roads, the majority of which are managed by Provías, a part of the MTC, while 16 highways are operated by private concessionaires under contracts of varying length. These are awarded by the state’s Supervisory Body for Investment in Transport Infrastructure for Public Use.

In November 2018 Rosa Nakagawa, vice-minister of communications, said public-private investment of $9.9bn would be channelled to road expansion and improvement works, adding 4936 km to the network. This is to be done through six projects that are to benefit villages in the interior of the country, such as a trans-Andes highway connecting the country’s coast to the Amazonas region. The projects are slated to be completed in 2021. Furthermore, February 2019 saw Carlos Estremadoyro, the vice-minister of transport and communications, announce that the government would present a package of road improvement and maintenance projects in the coming months worth a required investment of $4bn, and for which private investment would be sought. Large projects under way in the spring of 2019 include a 205-km road in the Ancash region as part of reconstruction works after El Niño. Spanish construction firm Sacyr won the MTC’s PEN126m ($38.1m) contract in March 2019, and the road is expected to take 16 months to complete. Construction is also in full swing on a new highway between Arequipa and Moqeugua, a connection with a price tag of $125.5m and also due for completion in 2020.

However, while the majority of the country’s road works are welcomed developments, some have been met with resistance. Peru approved a law in January 2018 that allows for the construction of roads in the Amazonas region of Ucayali, describing the move as being in the national interest. However, government groups that oppose this law include the Ministry of Culture and Congress’ Commission for Andean, Amazonian and Afro-Peruvian Peoples.


Greater political and economic stability since President Vizcarra took office in March 2018 and legislation that makes tender processes more transparent have improved the country’s attractiveness for investors. “There is a very strong appetite among investors for transport infrastructure projects in Peru,” Valverde told OBG. “The private sector has viewed recent projects positively, but we do not yet have concrete proposals for certain works. The Huancayo-Huancavélica rail project has been well received by investors, for example, and the list of pre-qualified bidders will be published in the second half of 2019.”

The prospects for investment in the sector are positive, as the need to close the country’s infrastructure gap is coupled with Peru’s improving image as a business destination. The latter is supported by a legal framework that facilitates PPPs. Planning processes must take into account that the acquisition of land and contracts now include an anti-corruption clause. The government is working to improve the business environment by hiring international consultants to contribute to the employment of best practices when carrying out joint works by the government and private sector.