The Andean Development Corporation (CAF) has approved two partial credit guarantees totalling US$211mn for Peru to guarantee the payment of the obligations of the republic to the concession companies responsible for construction of sections 2 and 3 of the South Inter-Oceanic Road Corridor.

The operation will create the conditions required for implementation of this important South American integration infrastructure project.

CAF President & CEO Enrique Garca explains that these operations are part of the efforts of the multilateral financial organisation to stimulate regional integration and foster competitiveness.

“This financing is the result of arduous work by a team from the Republic of Peru, the private sector and CAF to open the way for new forms of financing, executing and maintaining the support infrastructure for regional integration and the economic and social development that the country requires,” he says.

The South Inter-Oceanic Corridor consists of a road system that connects the maritime ports of San Juan de Marcona, Matarani and Ilo with the most important cities of southern Peru – Arequipa, Puno and Cuzco – and with Iapari and the triple border of Peru, Brazil and Bolivia, through Madre de Dios department.

This corridor has been conceived as a central component of the national strategy of supporting social equity, decentralisation and inter-territorial compensation which will generate important socioeconomic changes in a region with almost 6mn inhabitants – 20% of the Peruvian population and 32% of national territory – but which has higher levels of poverty than the national average.

“This mega-project has a clear regional integration orientation with the neighbouring countries and will be the first interconnection option between Peru and Brazil, fostering trade flows with the central western region of Brazil and the north of Bolivia, as well as toward the Pacific Ocean basin,” Garca says. “The South Inter-Oceanic Corridor meets one of CAF’s primary institutional objectives, which is to promote and finance sustainable infrastructure projects that contribute to the physical integration, production and logistics of the region.”

The construction of the corridor is accompanied by a parallel programme to strengthen the natural resource conservation services of the Peruvian state in an effort to ensure balanced development in the area of influence. This programme, which is valued at US$17mn, is also partially financed by CAF.