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C.J. Schexnayder

LIMA, Peru – After almost a year's delay, the final two sections of the massive $1.3-billion Interoceanic Highway project being built through southern Peru were awarded in late August to a pair of consortia composed of Peruvian firms.

The two sections make up the final 1,500 kilometers of a project started almost two years ago and is slated to be completed by the end of the decade. The estimated cost of these two sections is $282 million.

With the award of the two contracts, the promised development the project is designed to bring to the interior of the country will now be able to move forward, said Peru's Minister of Transportation and Communication Verónica Zavala.

"The start of work on these two sections of the highway will benefit to more than 4,700,000 people in the Southern zone of the country," she said at the ceremony to award the bids. "This represents one of the greatest projects of investment in the country."

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C.J. Schexnayder Extending the highway through Peru's interior will spur development, according to Minister of Transportation and Communication Verónica Zavala.

When the project is completed in 2009, more than 2,600 kilometers of two-laned paved road will run from the coast of Peru to the border with Brazil.

Crossing the Iñampari Bridge over the River Acre will put travelers in the Brazilan town of Assis which is the end point of that country's highway system. From there it's just a 4,000 kilometer drive over paved roads to the Atlantic Ocean.

The Interoceanic highway project is divided into five sections, or "Tramos." The three currently under construction consist of upgrading more than 1,000 kilometers of the existing two-lane unpaved road that was built more than three decades ago. The route runs through the Peruvian Andes and the jungle to Brazil.

In July of 2005, the three other sections of the roads were awarded to two concessionaires led by Brazilian construction firms; Conirsa, headed by Odebrecht and Intersur by Camargo Correa.

The two sections awarded this week are for the upgrade of existing highway that connect the new paved road to the Peruvian coast.

Section I of the project, which runs from the Pacific port of San Juan de Marcona to the mountain town of Urcos, was awarded to Consorcio Interocánica made up of Graña y Montero, JJC Contratistas Generales, Ingenieros civiles y Contratistas Generales S.A.

Section Five of the project, which extends from just outside of the southern highland town of Juliaca to the ports of Ilo and Mollendo, was won by Concesionaria del Sur. That joint venture comprises Hidalgo e Hidalgo S.A., Construcción Administración S.A.C. and Consorte S.A.

The firms will be required to complete the upgrade work within three years and then handle maintenance and operations over the life of the 25-year concession contracts. Financing will be arranged by the consortia themselves; but the expense will be recouped through tolls and payments by the Peruvian government over the life of the contract.

As part of its new generation of public private partnerships, Peru promises the concessions a constant annual payment as compensation for investment works -- provided they meet contractual milestones.

According to the Ministry of Transportation and Communication, six groups made up of companies from across the region bid on the two contracts.

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C.J. Schexnayder The final two sections are in remote areas, but the terrain is not nearly as challenging as the other three.

Although the final two sections are expected to be a challenge due to their length, they don't present the extreme range of difficulties the other sections of the roadway face. The mountain sections of section II and III take the roadway to almost 5,000 meters and the jungle portion is shut down half a year due to the amount of rainfall.

To date, more than 400 kilometers of the highway has been completed and substantial progress has been made on bridge and drainage for the roadway as well.

Initially, sections I and V were planned to be awarded in November of last year. Officials said in June that terms would be delayed in order to improve the benefits for the country. President Alan Garcia lost patience and publicly blasted the agencies involved. The head of ProInversion, agency to promote private investment in Peru, René Cornejo, was forced to step down as a result of the furor.

Garcia has prioritized upgrading the country's infrastructure in order to spur Peru's economic growth. Of the almost 79,000 kilometers of roadways in the country, less than 11,000 kilometers are paved. The Ministry of Transportation and Communications (MTC) estimates that only a quarter of the road system is in 'good' shape, a percentage they would like to increase to 45 percent.