August 10, 2017 / 11:10 PM / in 3 months

Peru to award $6.15 billion in post-flood rebuilding contracts through 2021

LIMA (Reuters) - Peru plans to award at least $6.15 billion in post-flood construction contracts through 2021 in expedited bidding rounds that have already drawn new companies to the country, Peru’s reconstruction czar told Reuters Thursday.

Peru's post-flooding reconstruction czar Pablo de la Flor speaks during an interview at the Reuters Latin American Investment Summit in Lima, Peru, August 10, 2017. REUTERS/Mariana Bazo

Pablo de la Flor, tasked with ensuring that infrastructure destroyed by recent floods is rapidly rebuilt, said a quarter of the funds was intended to prepare El-Nino-prone Peru for the kind of extreme weather expected to increase with climate change.

Projects costing nearly $600 million should start this year followed by works costing $2.2 billion in 2018, helping to spur economic growth that slowed sharply in the wake of a brutal rainy season, de la Flor said.

Sudden and severe flooding in Peru this year killed more than 100 people and wrought some $4 billion in damage to infrastructure, or about 2 percent of gross domestic product.

Because of the urgent need for new roads, bridges, levees, housing and schools, contracts will likely be bundled together and awarded in a month instead of up to a year, de la Flor said.

Tight deadlines for issuing permits will keep the projects from facing the usual bureaucratic delays, de la Flor added.

“Our role is to coordinate, facilitate and push,” de la Flor, a former trade negotiator and banking manager, said in an interview at his office for the Reuters Latin America Investment Summit. “We have a whip hidden back here.”

The floods swamped Peru just as a graft scandal involving Brazilian builder Odebrecht raised questions about some of the country’s biggest construction companies.

Peru's post-flooding reconstruction czar Pablo de la Flor speaks during an interview at the Reuters Latin American Investment Summit in Lima, Peru, August 10, 2017. REUTERS/Mariana Bazo

Peru barred Odebrecht and any other company that has acknowledged or been convicted of corruption from bidding on government contracts.

Grana y Montero, Peru’s biggest construction company and Odebrecht’s main local partner, is not under investigation but the attorney general’s office has not ruled out a potential probe.

“In principle, Grana is not impeded” from bidding on the contracts, de la Flor said. “But we’d prefer that no company about which there is any suspicion of doubt...take part.”

Grana, which has repeatedly denied any knowledge of or involvement in bribery, declined to comment.

De la Flor said companies from Turkey, Spain, Argentina, Colombia, China and North America have expressed interest in the contracts, including several that are new to Peru.

Latin American builders were the keenest because prospects for the construction sector in the rest of the region were dim.

“We’re going to benefit from the competition,” said de la Flor.

All contracts will include clauses to hold companies liable for any corruption, he added.

Reporting by Mitra Taj and Marco Aquino; Editing by Phil Berlowitz and Eric Meijer

Our Standards:The Thomson Reuters Trust Principles.
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