Peru Project Finance: Make it Rain
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.
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
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