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Peru awards multibillion-dollar subway project to sole bidder
March 28, 2014 / 6:30 PM / 4 years ago

Peru awards multibillion-dollar subway project to sole bidder

LIMA (Reuters) - A consortium made up of Spanish, Italian and Peruvian builders won a contract for a multibillion-dollar subway line in Lima after competitors unexpectedly dropped out of the contest last week, Peru’s state investment agency said on Friday.

Peru's President Ollanta Humala (L) greets new Prime Minister Rene Cornejo during the swearing-in ceremony of new members of his cabinet at the government palace in Lima Febraury 24, 2014. REUTERS/Mariana Bazo

Consorcio Nuevo Metro de Lima will build and maintain the mostly underground 35-kilometer (22-mile) line in a 35-year private-public concession, state investment agency Proinversion said.

The Peruvian government will put about $3.8 billion toward construction and maintenance of the project, with additional costs covered by the company.

Proinversion had put the total cost of the project at no more than $6.62 billion, and the consortium said it won the concession with a $5.35 billion bid.

Consorcio Nuevo Metro de Lima includes Spanish builders Iridium Concesiones de Infraestructura, FCC (FCC.MC), Italian firms Salini Impregilo (SALI.MI), Ansaldo STS (STS.MI) and Ansaldo Breda, and Peru’s Cosapi.

Iridium, owned by ACS (ACS.MC), holds the biggest stake in the consortium, said Fernando Valdez, the group’s spokesman and Cosapi’s general manager.

Two consortiums, one led by Brazilian construction giant Odebrecht and the other by Peru’s biggest builder Grana y Montero GRAM.M (GRA.LM), failed to submit bids last week, sparking concerns that the auction might be flawed.

Proinversion said those groups wanted the government to raise the project’s cost ceiling, which it declined to do.

    “I assure you the process has been serious, objective and the result has been positive,” Transportation Minister Carlos Paredes said in a press conference after the announcement.

    Paredes said the subway, which will complement an existing system of buses and above-ground trains, is fundamental to improving the quality of life in the sprawling Peruvian capital, home to some 10 million people, or about a third of the country’s population.

    Valdez said construction will start in May.

    The fast-growing Andean country needs to spend between $30 billion and $88 billion to upgrade its infrastructure, according to estimates by analysts and officials.

    Prime Minister Rene Cornejo has said the government will award $13 billion in contracts for infrastructure projects this year.

    Reporting By Lucas Iberico Lozada, Writing by Mitra Taj; Editing by Chizu Nomiyama and Paul Simao

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