Peru Project Finance: Make it Rain

Apr 1, 2011

Odebrecht is using an auction structure to bring private-public financing to a Peruvian infrastructure project. The financing format may be used elsewhere in LatAm.

by Jef Cozza

As agribusiness expands to meet rapidly growing world food demand, Peru is positioning to ride the trend. The government is helping to backstop financing for a new agricultural project that will turn 43,500 hectares of desert into arable farmland.

The Olmos Project will cost over $500 million, with water delivery to the Lambayeque region expected to begin by March 2013. Financing for the project will be guaranteed by the Peruvian government but serviced using future cashflows from selling water to the companies farming the land. This model may pave the way for similar irrigation projects elsewhere in LatAm.

Peru’s northern coastline may provide a particularly attractive opportunity for farmers. "The Peruvian coast can be seen as a great, natural greenhouse," says Peruvian agribusiness expert Fernando Cillóniz, president and general manager of inform@cción, a Peruvian economic think tank specializing in the agricultural sector. "We don’t have...

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