Possible law change complicates Chinese company’s control of the Peruvian megaport
Photo: Flickr.
The People’s Republic of China’s future investments in Peru face tensions amid the upcoming inauguration of the port of Chancay in November, as Peru’s National Port Authority (APN) presented a project to change the National Port System Law, which would affect the exclusivity of the mega-port.
The APN said in a press conference that the granting of exclusivity over the use of the port to Hong Kong-based Cosco Shipping Ports was done without having the legal framework to do so. Therefore, a proposal was presented to change the port law.
The purpose of this new law is that there is a legal framework for investment modalities through administrative authorities to have the possibility of exclusivity, according to Milagros Miguel, head of APN’s legal advisory unit.
Miguel clarified that this bill is proposed for all private projects of public use under this modality of investment through administrative authorizations, and that Cosco Shipping will be able to reapply for exclusivity over the port under new guidelines.
In view of this new requirement, Cosco Shipping responded that “the exclusivity managed and granted in 2021 after an exhaustive process abiding by the legal framework required for such purpose, was an important aspect for the partners of the Port of Chancay project to make the decision to invest the US$1.3 billion in its first stage.”
The company clarified that although it is a macro project that will generate great public benefits, it is a private infrastructure that has involved the investment of several shareholder companies; therefore, this new resolution constitutes an affectation to the security and legal stability of present and future investments in the country.
China has been Peru’s leading trade partner since 2014, accounting fo 36% of Peruvian exports, followed by the United States with 13.9% as of November 2023, according to official statistics.
Regarding the port, Cosco acquired 60% of Terminales Portuarios Chancay for US$225 million in the first half of 2019, sharing a partnership with the Peruvian mining company Volcan, which owns the remaining 40%. This is the first port that the large Chinese state-owned shipping company will control in its entirety in the Western Hemisphere.
Cosco Shipping has 34 terminals worldwide, 11 of which are located outside China. However, the port of Chancay has a special importance as it is due to become the first Chinese logistics hub for the Pacific side of Latin America.
Main source:
Cosco tendría que solicitar “otra vez” exclusividad de servicios en puerto de Chancay | Gestión (2024, Abril 02). https://gestion.pe/economia/cosco-tendria-que-solicitar-otra-vez-exclusividad-de-servicios-en-puerto-de-chancay-puertos-en-peru-apn-mtc-noticia/?ref=gesr
Other related sources:
Cosco responde ante pedido de anular su exclusividad de servicios en puerto de Chancay| Gestión (2024, Marzo 26). https://gestion.pe/economia/cosco-responde-ante-pedido-de-anular-su-exclusividad-de-servicios-en-puerto-de-chancay-infraestructura-portuaria-mtc-apn-noticia/?ref=gesr
El primer puerto de China en Latinoamérica se construye en Perú | Universidad de Navarra (s.f.). https://www.unav.edu/web/global-affairs/detalle/-/blogs/el-primer-puerto-de-china-en-latinoamerica-se-construye-en-peru
Puerto chino de Perú enfrenta desafío por su modelo de negocio antes de ser inaugurado | Bloomberg en Línea (2024, Abril 02) https://www.bloomberglinea.com/latinoamerica/peru/puerto-chino-de-peru-enfrenta-desafio-por-su-modelo-de-negocio-antes-de-ser-inaugurado