Chinchero Airport will not be ready in this government

The Chinchero International Airport in Cusco (AICC) is the commitment of the State and regional authorities to decentralize the tourist offer of Peru. Since previous governments it has not been free of controversies, to the point that its implementation generates more doubts than certainties.

The interest in starting a terminal in the Chinchero pampas dates back to the late 70s, and in its penultimate chapter it meant the defeat of the Peruvian State in an arbitration at the International Center for Settlement of Investment Disputes (ICSID) against the companies Kuntur Wasi and Corporación América SA for having withdrawn them from the concession contract – this happened during the management of Pedro Pablo Kuczynski and Martín Vizcarra (when he was Minister of Transport and Communications) -.

Now, with the interest placed on this project, located in the province of Urubamba, since the year of the bicentennial, the scenario of a new arbitration is not ruled out.

Why are the works delayed?

In July 2021, through a Government to Government (G2G) contract, it was agreed with South Korea that the Natividad Consortium execute the project. 47 months were established to complete construction – that is, by July 2025; However, internally they are aware that the date will not be met.

Along with Natividad, a Korean Project Management Office (PMO) was tasked with technical assistance and the AICC Consortium with supervision – also known as the engineer, taking into account the FIDIC contract.

As La República reported in February of this year, the supervisor assures that the works at the Chinchero Airport barely exceed 10% – 12%, according to the MTC – and its full operation would only arrive in 2027.

Carlos Fernández, director of the PMO Chinchero, mentioned that the airport will only be built in March 2026, although Natividad “would not be in a position to finish it” and even, if flights were scheduled before that date, it would show “precarious” work. For his part, Werner Salcedo, regional governor of Cusco, predicts that it would not be ready until 2027.

A source close to the process acknowledges that “in no way will it be ready in 2025” and, beyond being built, it will also take time to refine the previous tasks for its operation: installation of machines, tests, electricity services, manuals, permits and operational assistance, among others, which would delay the start-up of the terminal.

At the closing of this note, the works in Chinchero are temporarily paralyzed. The Natividad Consortium has asked the MTC for an additional US$197 million to comply. They allege lack of financing due to unforeseen factors such as 27% inflation in the project, that there is 20% more surface area to work on and that “the land with which phase 1 was delivered is not in a condition to receive the runway.” In addition, the container crisis and wars such as Russia-Ukraine have also resulted in unforeseen costs.

“How to pay if there is no progress?” countered the Vice Minister of Transportation, Ismael Sutta, during the last decentralized session of the Transportation and Communications Commission of Congress, held in Chinchero.

Even Fernández points out that there will always be things to resolve in a work as complex as the AICC, but “there is no reason for the sit-in” that Natividad is making, whom he accuses of requesting modifications via Substitute Technical Reports that have already been refuted by the competent authorities. “The contractor (Natividad) is in a situation of rebellion,” he mentioned.

Last Tuesday the 2nd, during his first intervention in the aforementioned parliamentary commission, Gerardo Pucciarello, general manager of the Natividad Consortium, stated that they were going to go to arbitration because it did not seem fair to them that the extra costs were not recognized. After this, Minister Raúl Pérez-Reyes announced that they were going to be given S/40 million to fulfill the commitments that Natividad has with the communities, build the perimeter fence of the AICC and the works in the passenger terminal. In six weeks the addendum will be signed and, if Natividad agrees, he will deliver the guarantee letter.

Nothing has been unlocked

The S/40 million that the MTC will give to Natividad does not come from the US$197 million they demand. A sector source recalls that the contract costs US$360 million (plus VAT) and what the contractor is asking for exceeds 50% of the agreed value.

“The consortium says that they will not ask for more money and they sell it as a price update, but there is no update with that magnitude of number. They (Natividad) have recognized that the FIDIC contract they have signed does not contemplate updating prices. They expressly renounced that, but they sell the idea that, by making a very competitive offer to the State, things have turned out squarely for them,” he told La República.

The source also specifies that the PMO, as the MTC’s control advisor for the Chinchero case, could recognize part of Natividad’s claim despite the fact that there is no price indexation and because, in cases like this, not recognizing it would constitute excessive onerousness. of the benefit.

“The construction of the Chinchero International Airport will continue and will not be paralyzed. This is a strategic project for the region because it will boost the economy and tourism in the country,” said Minister Pérez-Reyes after announcing the advance of S/40 million. However, the source indicates that Natividad will insist that the conditions he requests be accepted to the point that, implicitly, the MTC has recognized that arbitration will be used.

According to Pérez-Reyes, if an agreement is not reached, “dispute resolution mechanisms” will be applied, and what are they?: the Dispute Adjudication Board (DAB)—to which Natividad already went and was rejected—and, precisely, the arbitration. “The MTC has only bought a little time so that the people of Cusco do not get on top of it. And the signing of this addendum will not solve the underlying problem. They come back late. They should negotiate with the contractor morning, noon and night to sort everything out. The 40 million are a mere palliative,” he concluded. ❖

Who will operate the Chinchero Airport?

The General Directorate of Programs and Projects of the MTC reported that Proinversión will be in charge of the Third Group of Airports project, with which the operator of the Chinchero airport will be selected under technical conditions.

The operator will be a “high quality” one and will also ensure the modernization, rehabilitation, improvement, operation and maintenance of the airports located in Jaén, Huánuco, Jauja, Ilo, Rioja, Chimbote, Yurimaguas.

The project will be executed under the public-private partnership modality and will be self-financing. According to the MTC, the main operating activities are related to rescue and firefighting services, security, landing and takeoff, and aircraft parking services.