A sudden challenge has emerged for China’s $1.3 billion port in Peru, just months before its scheduled inauguration later this year. The port, operated by Cosco Shipping, was granted exclusive rights to provide services on the site. However, Peru’s port authority has recently reversed its decision and is now pushing for the port to be open to other companies offering similar services like loading and unloading shipping containers. This unexpected development threatens to alter the business plan for the port.
The Chancay port, set to open in November during Peru’s hosting of the Asia-Pacific Economic Cooperation conference, has attracted attention due to US-China trade tensions in South America. US officials have criticized Peru for allowing a state-owned Chinese company to lead such a significant infrastructure project in the country, pointing out that US firms have not made similar investments in the region. However, Peruvian authorities defend their decision, emphasizing that there was no private sector interest from US companies.
Once operational, the Chancay port could revolutionize South American trade by providing a direct route from Chancay to Shanghai. Exclusive deals are common in Peru, allowing port operators to recoup their investments by charging for infrastructure use. However, Chancay’s legal structure differs from other Peruvian ports as it was developed as a private entity from the beginning, unlike public ports that are later concessioned to private operators.
Despite this regulatory challenge, Transportation and Communications Minister Raul Perez Reyes confirmed that the Chancay port is still set to be inaugurated in November. The government is working on adjusting regulations to address the exclusivity issue while aiming to create a framework that is fair for all involved parties. Cosco criticized Peru’s stance on exclusivity over services as a key motivator for their investment in the port and warned that this challenge would negatively impact investor confidence in the country.
The United States has expressed concern over China’s growing influence in Latin America through its involvement in infrastructure projects like those seen with Peru’s Chancay Port. While some argue that China should be allowed more access into these projects due to lack of private sector interest from other countries, others fear that this could lead towards economic dependence on China.
In conclusion, China’s $1.3 billion port facing regulatory challenges could change how business plans are executed if opened up for competition instead of exclusively operated by one company like Cosco Shipping.
