30 December 2005
The Trans-Oceanic Highway is one of the key projects of the Peru-Brazil-Bolivia axis of the IIRSA initiative. The project entails the construction and renovation of a total of 2603 kilometers of roads connecting the Amazonian state of Acre, Brazil with the port cities of Ilo, Matarani and San Juan de Marcona in the southern coast of Peru. The Brazilian section of the highway has been partially built.
Introduction
The Trans-Oceanic Highway (also known as “inter-oceanic” or “bi-oceanic” highway) is one of the key projects of the Peru-Brazil-Bolivia axis of the IIRSA (South American Regional Infrastructure) initiative. The project entails the construction and renovation of a total of 2603 kilometers of roads connecting the Amazonian state of Acre, Brazil with the port cities of Ilo, Matarani and San Juan de Marcona in the southern coast of Peru. The Brazilian section of the highway has been partially built. Roads BR-364 and BR-317 have been paved from the Brazilian cities of Porto Velho and Rio Branco to Iñapari on the border with Peru. For this reason, the Trans-Oceanic Highway is generally discussed as a renovation and improvement project of three routes that connect the Peruvian-Brazilian border with the Peruvian coast (see map in Figure #1).
Figure #1: Map of the Trans-Oceanic Highway [1]
Objectives
According to proponents, the construction of the Trans-Oceanic Highway will facilitate the transfer of Brazilian goods to the Pacific coast (and to Asian markets), and of Asian products to the Atlantic coast (and to US, European, and Brazilian markets). Peruvian President Alejandro Toledo has stated that the Highway will expand access for Peruvian products in Brazilian markets, resulting in an annual increase of 1.5 percent of Gross Domestic Product.
Works
Highways
The Brazilian side has a more complete network of roads. In Brazil, investments center on the construction of an international bridge over the Acre River and a more efficient border crossing. On the Peruvian side, works include the construction of a paved road covering the existing route between the Inambari River and the border with Brazil, as well as the renovation and/or improvement of three paved roads that cross the Andes to connect with the ports of San Juan de Marcona, Matarani and Ilo in the southern coast of Peru.
For Peru, the project entails the construction and renovation of a total of 2586 kilometers of highway, plus approximately 17 kilometers of urban roads (not including the Juliaca urban area). In order to facilitate implementation of the necessary works, the project is divided into five stretches (see Table #1).
Table #1: Stretches of the Southern Trans-Oceanic Highway [2]
| Stretch Number |
Planned Connections |
Length of paved road (in km.) |
Length of unpaved road |
Publication date for final contract |
Date of contract allocation |
| 1 |
San Juan de Marcona-Urcos |
763 |
0 |
January 27, 2006 |
March 10, 2006 |
| 2 |
Urcos-Inambari |
0 |
300 |
June 13, 2005 |
June 23, 2005 |
| 3 |
Inambari-Iñapari |
0 |
403 |
June 13, 2005 |
June 23, 2005 |
| 4 |
Inambari-Azángaro |
0 |
306 |
June 13, 2005 |
June 23, 2005 |
| 5 |
Ilo-Juliaca; Matarani-Azángaro; Puente Gallatini-Humajalso |
752 |
62 |
January 27, 2006 |
March 10, 2006 |
Bridges
Construction of approximately 22 bridges –including the President Guillermo Billinghurst Bridge—at various points throughout the axis roads serves to complement the renovation of the Trans-Oceanic Highway. The Billinghurst Bridge will cross the Madre de Dios River just a few meters distance from Puerto Maldonado, the Madre de Dios department’s main city. The bridge will be 722 meters long and will display a hanging structure of 528 meters. PROVIAS NACIONAL is in charge of conducting the feasibility study of this part of the project, which will require an investment of approximately US$22 million. [3]
Financing
The project (including the construction of the Billinghurst Bridge) has a total estimated cost of US$ 1.31 billion, although various analysts predict a higher final cost.[4] The implementation of works in project stretches 2, 3, and 4 represents an investment of approximately US$810 million. Investments associated with works in stretches 1 and 5 are close to US$199 million.
The project’s main sources of financing are the Brazilian National Development Bank (BNDES) and the Andean Development Corporation (CAF, by its Spanish acronym). In December 2004, the BNDES approved a US$400 million loan to build the stretch of road between Acre and Cuzco. In September 2005, CAF approved a credit line of US$ 200 million to facilitate the start of the construction of highway stretches 2, 3, and 4. The credit line or “bridge credit” allows licensed companies to sign contracts with CAF in order to receive a loan, and thus obtain a credit guarantee from the Peruvian government.
Concessionary Process
Such bank loans are designed to finance a Public-Private Partnership between the Peruvian government and various companies contracted to carry out road construction, renovation, operation, and maintenance. ProInversión, led by the Ministry of Transportation and Communication, is the Peruvian governmental entity in charge of promoting and awarding the country’s services and infrastructure. According to the data in Table #1, ProInversión has already awarded three of the five stretches, and is in the process of licensing the remaining two.
In June 2005, stretches 2, 3, and 4 were allocated –stretches 2 and 3 to the Inter-Oceanic Concessionary Consortium, comprised of the firms Odebrecht-G y M Consultores (from Brazil) and Graña, JJC and Civil Engineers (from Peru). Stretch 4 was awarded to the Consorcio Intersur, comprised by Brazilian firms Andrade Gutierrez S.A. and Queiroz Galvao S.A.. Licenses are valid for 25 years and companies receive Peruvian government funds to operate and maintain the highways after their completion.
Socio-Environmental Impacts
Several NGOs and other entities that monitor Trans-Oceanic Highway developments have indicated that the project was approved without a prior definitive Environmental Impact Study (EIA, by its Spanish acronym). Typically, before a project of this magnitude can be approved, an EIA must be produced that includes, among other aspects, a) consideration of development alternatives and reasons why they were not chosen; b) assessment of environmental, social, and institutional risks that might result from the proposed works; c) ample discussion of the project’s environmental and social impacts; and, d) proposal of action plans to avoid or minimize such environmental, social, and institutional impacts. Very little of this type of analysis has been carried out in the case of the Trans-Oceanic Highway.
A few years ago, Marc Dourojeanni, former environmental advisor at the Inter-American Development Bank (IDB), wrote a report about prospects for social and environmental impacts associated with the Trans-Oceanic Highway. The report maintains that, in the “MAP” tri-national region, the Highway’s negative outcomes could be enormous, but that environmental consequences will be even worse in Peru. Financial entities involved in the Peruvian part of the project either do not have sound socio-environmental policies and regulations (this is the case, for example, of the BNDES), or depend on a system where the awarding government is in charge of applying measures to avoid and minimize the project’s impacts (CAF). The report compares Brazil’s and Peru’s institutional capacity and determines that the Peruvian government does not have the capability to ensure compliance with a series of weak laws that attempt to mitigate socio-environmental damages.
The project’s Peruvian stretches pass through various indigenous territories and natural parks within areas of tremendous socio-cultural and ecological diversity. Dourojeanni’s report discusses direct and indirect impacts of the Brazilian case, showing that the Highway often extends along rainforest areas spanning at least 50 km on each side of the roads. He estimates the impact in Peru to be as significant. Table #2 lists several impacts that could emerge, with varying intensity, in the Madre de Dios department primarily as a result of the new Highway:
Table #2: Common environmental and social impacts associated with highway projects in the Cuenca Amazónica [5]
|
Environmental Impacts |
Social Impacts |
- Deforestation as a result of legal and illegal (migrant) farming in agriculturally inadequate soil.
- Forest degradation caused by unregulated, non- renewable extraction.
- Increased risks of forest fires.
- Illegal hunting for meat, leather, and furs, and trafficking of live animals in particular.
- Abusive fishing, frequently with illegal gear, dynamite, and other toxic substances.
- Soil erosion as a result of hillside deforestation and soil mismanagement.
- Chemical pollution of soil and water caused by the abuse of agro-chemicals or mining.
- Reduction in forests’ environmental benefit (water cycle, lock in of CO2, etc.).
- Invasion of protected areas (i.e., national parks).
- Decreased aesthetic and tourism value.
- Loss of biodiversity and extinction or rarifying of species.
|
- Invasion of indigenous lands by farmers, timber merchants, and miners, and eventual killing of indigenous population by disease or in scrimmages.
- Displacement of indigenous populations, invasions of other indigenous territories, and Inter.-group conflicts.
- Land speculation and illegal land expropriations.
- Proliferation of illegal crops (coca).
- Trafficking of drugs, arms, wild animals and other general smuggling.
- Increase in migration to urban areas, degradation of social and environmental services in cities and local villages.
- Spread of shantytowns (“barriadas” or “favelas”).
- Fostering of slaving underemployment (i.e., in mining or garimpo and in lumber industries)
- Increase in female and child prostitution.
- Loss of traditional cultural values.
|
It is worth mentioning that various critics such as the Peruvian NGO Asociación Civil Labor believe that the size of the international Billinghurst Bridge could cause serious social and environmental impacts in the urban area of Puerto Maldonado, capital of Madre de Dios.
Latest Developments
Although belatedly and hastily, Supreme Decree No. 087-2005 proposes the creation of an integral development plan for the Peruvian section of the Trans-Oceanic Highway. The recently constituted High-Level Inter-Governmental Committee, presided by the National Decentralization Council, is comprised of vice-ministers from various sectors, regional presidents, and mayors of the departments of Apurímac, Arequipa, Ayacucho, Cusco, Huancavelica, Ica, Madre de Dios, Moquegua, Puno, and Tacna. Starting at the end of 2005, and during a time period of no more than 120 days, the Committee must create a “Development Plan for the Economic-Productive Southern Corridors.”[6] This process will grant Peruvian civil society an opportunity to evaluate the opinions of the various communities—as well as other relevant actors—that live alongside the Highway. In addition, it will open new spaces of discussion and consensus-building, making it possible to debate the best way to even the playing field between Peru and Brazil in terms of institutional capacity.
On the other hand, it is important to remember that the contract for highway stretches 1 and 5 has not yet been finalized. Presumably, until this occurs, civil society will have certain opportunities to influence the terms of the contract. Still, formal closing processes, consultations with communities, and contract awards will be aimed at potential concessionaries rather than the project’s alleged beneficiaries.
Notes
This summary was written by Kenn Rapp, a consultant for the Bank Information Center in Washington, DC.
[1] La Integración Regional entre Bolivia, Brasil y Perú. 2002. Wagner, A. and Rosario Santa Gadea Duarte, eds. CEPEI, Lima
[2] Most of this data can be found on the ProInversión webpage, www.proinversion.gob.pe/oportunidades/SIT/sit011.htm
[3] Patrón, P. “A Loan for a Risky Highway” in Observatory Bulletin IFIS No. 4, undated. Asociación Civil Labor, Lima.
[4] Patricia Patrón, personal communication, January 9, 2006. Numbers are based on amounts presented by ProInversión and by the Supervisory Organ of Public Transportation Infrastructure Investments (OSITRAN).
[5] From “Impactos Socioambientales Probables de la Carretera Transoceánica (Rio Branco-Puerto Maldonado-Ilo) y la Capacidad de Respuesta del Perú,” in La Integración Regional entre Bolivia, Brasil y Perú, pp. 311-322. 2002. Edited by Allan Wagner and Rosario Santa Gadea Duarte. CEPEI, Lima.
[6] Patrón, P. “A Loan for a Risky Highway” in Observatory Bulletin IFIS No. 4, undated. Asociación Civil Labor, Lima.