OBG talks to Carlos Paredes, Minister of Transport and Communications

 Interview: Carlos Paredes

What changes are expected of the National Plan for Port Development and in what timeframe?

CARLOS PAREDES: Two international companies, APM Terminals and Dubai Ports World, are managing the development and modernisation of Callao Port. The aim is to convert the port into the main distribution centre for the Pacific coast region. The project will also include smaller ports that have varying degrees of commercial significance. Our objective is to have these ports developed by private investors. However, the government is prepared to subsidise through public-private partnerships the construction of any port that is not sufficiently attractive to garner total private investment.

We also intend to strengthen the role of the National Port Company (ENAP), which has been diminished because of the concessions of Callao Port. The reorganised and modernised ENAP will take over the management of other ports in the country. Total investment will be $1.5bn over the next five years, half from private sources and the other half from public-private partnerships promoted by the government.

How is cabotage treated in Peru and what are the incentives for private investment in transportation?

PAREDES: Presently, cabotage exists only in the northern portion of the country, between the ports of Talara and Callao for the transportation of hydrocarbons. However, we see great potential in such a system, and we are studying the requirements of cabotage infrastructure so that we can begin a tendering process with private companies in this field. ProInversión will be responsible for designing a cabotage model that Peru can offer to the transportation industry.

A top priority is to increase competition in the aviation sector to achieve better connectivity and lower passenger fares. New companies that enter the Peruvian market receive discounts on airport fees as incentives. The idea now is to develop bilateral agreements that would eventually create an international legal framework to facilitate the arrival of foreign companies.

We recently signed agreements with Turkey and South Korea, which have both expressed interest in using Peru as an air hub. The modern and functional infrastructure at Jorge Chávez Airport is our main incentive to foreign aviation companies, and there are plans to expand it further to better serve growing international demand. We must also ensure that our airports offer excellent quality in services and a high volume of traffic. Without these two conditions, secondary incentives, such as discounts, are irrelevant.

Which regions will be the targets of aviation development in the near future?

PAREDES: The government endeavours to subsidise aviation to regions that are not at present commercially strong enough to attract private investment. By increasing these regions’ connectivity, we can promote social inclusion and guarantee the competitiveness of certain sectors in agricultural production or tourist attractions. Here, too, ProInversión is designing a model that should encourage private operators to fly internal routes that are currently under-represented.

Cuzco Airport is the only major facility that has yet to be commissioned for renovation. A new Cuzco airport is needed to replace the existing one, which will have difficulties meeting demand in the coming years.

How is the government supporting the expansion of the country’s road network?

PAREDES: Only 53% of our national roads are paved. To reach our goal of paving 85% (20,000 km) in the next five years, we will prioritise logistics corridors for the 52 main production chains, whether by airports, railroads or highways. This government will complete construction of a road connecting the south with the north through the Andean highlands. A similar project is designated for the rainforest region, but this administration will not be able to complete more than 75% of the plan. To expedite the road’s development, segments of the road will be targeted for priority development.