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Public-Private Partnership Transforms a Road System and a Region in Peru

A decade ago, the only way to transport goods from the Port of Callao in Lima to the northern part of Peru was on the 183-kilometer Ancón-Huacho-Pativilca road system, a maze of narrow two-lane roads through a series of densely populated areas. For trucks transporting cargo the countless traffic jams cost precious time and money. For the local populations, the costs were felt in terms of congestion, noise and road safety.

Fortunately, today those problems have been mitigated thanks to a unique partnership between the Peruvian government, the private sector, and the IDB. As part of a Highway Development Plan designed to attract private investment in the country’s roads, the Peruvian government in 2003 handed over management and maintenance of the Ancon-Huacho-Pativilca system to Norvial S.A., a special-purpose company, under a 25-year concession.

The IDB then joined in to help finance the road expansion, upgrading, operation, and maintenance. Construction works completed during the first three years of the concession included two bypasses totaling 34.2 kilometers and detours to direct heavy traffic away from urban areas. The project also repaired existing roads, built two new bridges, and upgraded toll facilities. The improvements cut travel time by as much as third, improved access to the capital, and helped reduce congestion and the emission of toxic pollutants in populous areas.

In addition to providing sustainable long-term financing for the project, the IDB also helped strengthen the concession structure, improve the legal framework, and design environmental and social standards. For example, the Bank worked closely with the Ministry of Transportation and Communications as well as the regulator to strengthen the regulatory documentation prior to the Bank’s financing. In particular, given the complexity of the construction works and the interface with local communities, the IDB played an important role in managing resettlement issues and addressing concerns of communities that were affected by the project. Norvial is currently working with the IDB to improve road safety to reduce the number of traffic accidents.

The Ancon-Huacho-Pativilca was developed by a consortium that included Grana y Montero,  JJ Camet Construction and Besalco of Chile.

By facilitating the transport of agricultural and manufacturing products to commercial centers around Lima and the Port of Callao, the new road system has played a central role in the development of Peru’s northern region, which has grown at faster rates than the rest of the country in recent years. Put simply, better and safer highways save time and money for users of the system as well as those living around the highway.