The signing of the Concession Contract for the Peripheral Ring Road in Lima: A Milestone in Transportation Infrastructure

After several years of providing technical and financial advisory services to Proinversión in formulating and structuring the Peripheral Ring Road project in Lima, Steer supported the transaction through to the signing of the concession contract, finalized in November.

This project represents a new and strategic piece of transportation infrastructure for Lima, a city characterized by high levels of congestion and a significant gap in road capacity. Its implementation will reduce travel times for long-distance trips, benefiting both people and goods, thereby contributing to greater productivity for the country.

The Peripheral Ring Road aims to expand Lima’s core road network and connect key logistical nodes of the country—such as the port and airport—with national highways that lead to the production and consumption centres in northern, central, and southern Peru. The project promises substantial direct and indirect benefits for the city and the entire country.

Key Challenges of the Project

The concession of this ambitious project, with an estimated investment of USD 2.3 billion, faced several challenges:

1. Significant investment: This is one of Peru's most extensive Public-Private Partnership (PPP) projects.
2. Urban impact: The project is located in a densely urbanized area, affecting a considerable number of properties and residents.
3. Post-pandemic conditions: Factors such as financing risks, toll collection, and construction costs presented conditions distinct from previous years.

Steer’s role highlighted these challenges to the various stakeholders involved and supported the search for mechanisms to overcome them.

It was clear that successfully addressing these challenges required openness, innovation, and adaptability—a conviction shared not only by Steer but also by Proinversión, the company’s client. The decision to evolve was crucial in building innovative solutions that addressed the project’s unique characteristics and market conditions, enabling investment for both the public and private sectors.

Innovations in Project Structuring

Collaboration with Proinversión allowed for the implementation of innovative solutions tailored to the project’s characteristics and market conditions. Key innovations included:

1. Involvement of the concessionaire in land acquisition: To expedite the process, the concessionaire was included in land acquisition management, applying lessons learned from previous projects.
2. Segmented structuring: This approach allows functional sections to be delivered to the city sooner, accelerating the benefits of improved vehicle flow.
3. Verification milestones: Milestones were introduced before and during construction to ensure the project’s continuity and progressively confirm contributions from both the State and the private concessionaire.

This is the first PPP project in Peru to feature a bifurcated payment structure, interest rate and inflation adjustments, and a term determinable by the present value of toll revenue. These measures align the interests of the State and the concessionaire, accelerating the project’s operational rollout while ensuring the quality and maintenance of the infrastructure for at least 30 years.

A Collaborative Multidisciplinary Effort

The project’s success was made possible through coordinated and comprehensive work involving a multidisciplinary team. Steer served as the technical and financial advisor, alongside Garrigues as the legal advisor and Proinversión’s team, managing effective interaction with the various stakeholders throughout the process.