One of Peru’s greatest charms as a country – its extraordinarily dramatic and varied landscape – has also proven one of the greatest challenges to its economic development. The tapestry of river towns wreathed by Amazonian jungle, far-flung, mist-shrouded mountain settlements and desert pueblos means large portions of Peru have for decades been virtually cut off from one another.

This was true to such an extent that only 20 years ago, Peru’s most famous living author, Nobel Prize-winner Mario Vargas Llosa, could make the entire plot of his novel Lituma en los Andes (Death in the Andes) revolve around disappearances in the fictional remote Andean town of Naccos, a place so cut off it might as well be on another planet (a conceit that at the time was completely believable).


Such isolation also provided fertile ground, both logistically and sociologically, for rebel groups such as the Shining Path and Túpac Amaru, to operate in rural and indigenous communities that often saw little outside presence save for brutal military personnel and rapacious mining interests.

Making the connection

That being the case, it is no surprise that recent governments in Peru have made strengthening the country’s infrastructure a high priority, with the current administration of president Ollanta Humala (himself the son of an indigenous Quechua) no different. In Peru’s sprawling coastal capital Lima and beyond, the country's infrastructure sector remains one of the most robust areas for foreign investment.

“Infrastructure is key to various aspects of our development,” says José Gallardo Ku, Peru’s minister of transport and communications.

Among the large-scale infrastructure projects that have been undertaken with the assistance of foreign investment are two highway projects spanning hundreds of kilometres (the IIRSA Norte and the IIRSA Sur), a second metro line for the country's capital, Lima, and a metro line for its second largest city, Arequipa.

Built by a consortium of two Brazilian companies, Odebrecht and Andrade Gutierrez, as well as Peru's Grana y Montero, IIRSA Norte aims to connect relatively remote regions of Peru to Brazil, and was awarded the Global Road Achievement Award by the International Road Federation for its efforts to help preserve the environment. Odebrecht is also the chief driver behind IIRSA Sur, which is building and maintaining 656 kilometres of road between the Peruvian city of Urcos in the province of Quispicanchi to Iñapari in the state of Acre on the Brazilian border.

Given the company's deep involvement in the country’s infrastructure sector, Odebrecht’s director in Peru, Ricardo Boleira, tells fDi that the country is “one of the most evolved countries in Latin America in terms of foreign investment”.

Going underground

Beyond connectivity between cities, connectivity within cities has also given rise to some interesting projects.

An expansion of Línea 1 of the Metro de Lima by the Consorcio Metro de Lima (again Odebrecht working with Grana y Montero) extended the capital’s subway line to 35 kilometres, dramatically improving the commutes of hundreds of thousands of residents from the city’s coastal boundary to its eastern suburbs.

“The concession business is exactly that; it gives you predictable cash flows. So that is that main reason we're involved in infrastructure,” says Grana y Montero president Gonzalo Ferraro Rey. “And we have been very successful transmitting the concept [of public transportation].”

In 2014, the Peruvian government awarded a $5.7bn project to build a second subway line connecting Lima’s eastern suburbs with the province of Callao to the Consorcio Nuevo Metro de Lima, a group led by Actividades de Construccion y Servicios, a Spanish builder. 

Concern has been expressed in some quarters about the potential cost of Línea 2. The country's Chamber of Construction and Engineers Association said the project could be completed at a lower cost, and two other bidders withdrew from competition for the project after the government declined to accept the changes they requested.

A model development

In the city of Arequipa, an important manufacturing hub and Peru’s second largest city with a population of almost 1 million, the proposed metro could have an important impact on the city’s future development. Some believe that the metro systems being established in Lima and Arequipa could serve as models for other cities in the country, reducing commuting time and increasing productivity.

“We think [that the metro system] could be a solution [to transportation issues] in certain cities in the country,” says Mr Ku.

As Peru continues to make strides in allowing its people greater freedom of movement through projects such as IIRSA Norte, IIRSA Sur and the Metro de Lima, new horizons are being opened up not just for the Peruvians themselves, but also for investors interested in supporting ambitious long-term projects.