Peru and Chinese state-owned COSCO Shipping have resolved a dispute over the $3.6bn Chancay port development which could be transformative for cargo trade between Asia and Peru.
Peru and COSCO Shipping were caught in a spat for exclusivity rights which, according to Peru’s port authority, were given to Cosco by an ‘administrative error’. On the other hand, COSCO Shipping has been building the port with expectations to be its exclusive operator when it opens in November if everything goes on schedule.
A judge was asked to annul the decision because the government believes that the facility should be available to other companies offering services such as loading and unloading shipping containers. The sides then started a negotiation process to reach an amicable resolution without resorting to international arbitration.
The lawsuit was challenged by COSCO and even Peruvian industry groups which claimed that almost all other ports in Peru had exclusive operators.
The government of current Peru president Dina Boluarte has now stated that the issue has been resolved. The port authority claimed that COSCO’s exclusivity was no longer under challenge but had become a fact. The judge was also asked to dismiss the lawsuit.
The timing of the dispute resolution has been perfect since Boluarte will be having meetings with COSCO officials and Chinese president Xi Jinping later this week as part of his visit to the Asian country.
This was not even the only problem for the port’s construction as it also faced landslides halting development as well as interference from the US which has been lobbying to restrict Chinese investments in Peruvian infrastructure.
Of the $3.6bn cost of construction, $1.3bn has already been invested in the initial phase. In 2019, COSCO purchased 60% of the shares in Terminales Portuarios Chancay from Volcan Compañía Minera, a subsidiary of Swiss firm Glencore, thereby buying into the development of the Chancay port.
When the port is completed, cargo will be able to reach Asia from Peru in 10 days, rather than 45 at present. Brazil is also expected to be a beneficiary of the port, which will provide quicker access to Asian markets for the country’s exports.
Brazil and Peru are connected by the Southern Interoceanic Highway, which passes through the Brazilian agricultural hubs of Acre and Rondônia.