Chinese lenders raise concerns about $1.3 billion Peru port deal

Chinese lenders are concerned about future investments at a $1.3 billion port in Peru set to be inaugurated this year, executives told a congressional committee. 

Peru’s government is trying to revoke a deal that granted Chinese state-owned company Cosco Shipping exclusive rights to run the new Chancay Port. While most major Peruvian ports have a single operator, Peru argues it didn’t have the legal authority to grant the new facility the same treatment.  

“We have received communication from the syndicated banks that gave us the loan and from Cosco saying ‘What is going on here, we don’t understand,’” Carlos Tejada, adjunct general manager of the Chancay Port, told lawmakers this week. He added that investors have “serious concerns” about continuing to finance future stages of the project. 

The port, minority owned by Volcan Cia Minera, is set to transform South American trade by creating a direct line from Peru’s Pacific Coast to Shangai. China is Peru’s biggest trading partner. 

Chancay was financed with a $975 million loan provided by a group of lenders, including Bank of China and  China Minsheng Banking Corp. 

Lawmakers said during the committee session that they aim to pass a bill that would allow Cosco to regain its single operator status. But executives said that does little to assuage their concerns, arguing there is no guarantee their exclusive status would indeed be restored. 

As a single operator, Chancay would be able to generate revenue by charging vessels for the use of services at the port, such as loading and unloading shipping containers. If it were to become a multi-operator port, as Peruvian authorities are seeking, other companies would be able to carry out and bill for those services, undermining the revenue Chancay can generate for its shareholders.