Inter-Oceanic Highway Section 2

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In August 2005, Consorcio Concesionario Interoceanica Urcos –Inambari signed a 25 year build-own-transfer contract with the government of Peru for Section 2 of the Inter-Oceanic Highway. The Inter-Oceanic Highway was a road corridor that was planned to connect the Atlantic Ocean in Brazil with the Peruvian ports of San Juan de Marcona, Matarani and Ilo, in the Atlantic. The contract was part of the Inter-Oceanic Highway project which entailed the construction and renovation of a total of 2603 kilometers of roads connecting the Amazonian state of Acre, Brazil with the port cities in the southern coast of Peru. Section 2 was a 300 km. stretch that went from Urcos (in the Department of Cusco) to Inambari (Madre de Dios). It was estimated that this section would require an investment of US $263 million. The concessionaire was responsible for building, improving and rehabilitating, operating and maintaining the road sections, according to the technical guidelines contained in the Agreement (level of service index, among others). ProInversion, Peru’s private investment promotion agency carried out a public tender for the contract in June 2005. The public tender was awarded to the bidder who obtained the highest score according to a math formula based on the lowest value of periodic payments, and the national component proposed by the bidder. Later that month, ProInversion awarded the contract to Consorcio Concesionario Interoceanica Urcos–Inambari. The following companies made up the consortium: Construtora Norberto Odebrecht S.A. (70%), Constructora Grana y Montero S.A. (18%), JJC Contratistas Generales (7%) and Ingenieros Civiles y Contratistas Generales (5%). Financial closure was reached in March 2006, when the Andean Development Corporation (CAF) signed a US $150 million bridge line of credit agreement for Section 2 and Section 3 of the Inter-Oceanic Highway with the concession holder IIRSA Sur S.A. Section 2 received US $59.08 million while Section 3 received US $91.38 million. Consorcio Concesionario Interoceanica Urcos–Inambari enjoyed 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 are biannual payments for each stage of construction, upon conformity of works. PAMO are quarterly payments for operation and maintenance. The main source of funds for PAO and PAMO came from toll revenue collected by the concessionaire that was deposited in a trust fund. If toll revenue would not be sufficient to cover costs, then the Peruvian government agreed to pay the difference.