Inter-Oceanic Highway Section 1

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On October 23, 2007, the Ministry of Transport and Communications for the government of Peru signed a 25 year concession contract with Consorcio Interoceanica Tramo 1 to rehabilitate Inter-Oceanic Highway Section 1. Section 1 was 757.6 km of paved road stretching from San Juan De Marcona to Urcos, consisting of the following stretches San Juan - Emp. Panamericana (39,7 Km), Emp. Panamericana-Nazca (38,3 Km), Nazca – Dv. Pampa Chiri (245,8 Km), Dv. Pampa Chiri-Chalhuanca (95,2 Km), Chalhuanca-Emp. R03S (102,7 Km), Emp. RO3S-Abancay (15,3 Km), Abancay-Pte. Cunyac (96,7 Km), Pte. Cunyac-Cusco (92,7 Km),and Cusco-Urcos (31,2 Km). Inter-Oceanic Highway Section 1 was part of the southern section of the Inter-Oceanic Highway project which entailed the construction and renovation of a total of 2,603 kilometers of roads connecting the Amazonian state of Acre, Brazil with the port cities in the southern coast of Peru. Consorcio Intersur won the contract through a competitive tender carried out by ProInversion (Peru’s private investment promotion agency) in January 2005. The public tender was awarded to the bidder who obtained the highest score, according to a math formula based on the lowest value resulting from adding the present values of PAO and PAMO payments, and the national component proposed by the Bidder. Although seven bidders presented technical offers, only one bidder submitted an economic offer, Consorcio Interoceanica Tramo 1, and won the tender in August 2007. It was comprised of the following companies: Grupo Grana SAA y Montero, JJC Contratistas Generales, Ingenieros Civiles y Contratistas Generales SA. It was estimated that this section would require an investment of US $98.9 million. The concessionaire was responsible for improving and rehabilitating, operating and maintaining the road sections, according to the technical guidelines contained in the agreement (level of service index, among others). The concessionaire obtained a revenue guarantee from the government, based on two types of payments: Annual Payment for Works (PAO) and Annual Payment for Maintenance and Operation (PAMO). PAO were biannual payments for each stage of construction, upon conformity of works. PAMO were quarterly payment for operation and maintenance. The main source of funds for PAO and PAMO came from toll revenue collected by the concessionaire that was set to be deposited in a trust fund. If the toll revenue was not enough to pay the concessionaire, the Peruvian Government agreed to pay the difference. The concessionaire was expected to take possession of the assets after contract signing in October 2007. 24 months were allotted for construction. Construction works were concluded in October 2010.