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Peru:. Investment opportunities. March 2011. PERÚ: UN CAMPO FERTIL PARA SUS FOR YOUR . PERU: FERTILE GROUND INVERSIONES INVESTMENT AGRIBUSINESS SECTOR Natural greenhouse. The best agricultural yields in the world. . Sugar cane (1st). . Asparagus, olives and
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Peru: Investment opportunities March 2011
PERÚ: UN CAMPO FERTIL PARA SUS FOR YOUR PERU: FERTILE GROUND INVERSIONESINVESTMENT AGRIBUSINESS SECTOR Natural greenhouse. The best agricultural yields in the world. Sugar cane (1st) Asparagus, olives and (3rd) Grapes (5th) artichokes Seasonal windows in the most important markets. Projections expect that the 90,000 ha currently used for agro exports to double as consequence of large irrigation projects in portfolio. Over US$ 2,5 billion in exports of fresh and processed products to over 113 countries. Products with high export value.
AGRIBUSINESS SECTOR Agricultural Sector Exports per destination market (2009) Germany United States Spain Netherlands Agricultural Exports (US$ million) France United Kingdom Non-decaffeinated coffee Fresh grapes Rest Prepared asparagus Fresh asparagus Source: BCRP, FAO, ADEX DataTrade.
FISHERIES SECTOR Extensive fishing coast (3,080 km) and “water mirrors” that offer adequate conditions for the development of marine and continental aquaculture. first producer of fishmeal and fish oil in the world. Distribution of Peruvian fisheries products to over 100 countries. Trend towards diversification. product
FISHERIES SECTOR Fisheries Sector Exports per destination market (2009) Fisheries Exports (US$ million) BELGIUM UNITED KINGDOM DENMARK CANADA TURKEY 3,000 2,500 JAPAN CHI CHD Exportaciones Pesqueras 2,413 2,200 1,958 Fisheries 1,768 2,000 1,500 1,626 GERMANY 2,200 OTHER 1,131 1,123 1,056 1,026 1,000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: BCRP, FAO, ADEX DataTrade.
MINING SECTOR Polymetallic country, third in gold, silver, copper and zinc reserves. Only 20% of territory with mining potential has been explored. First silver world producer. In Latin America: 1st gold, zinc, silver, tin 2 nd and lead producer. copper and molybdenum producer. The investment in the sector exceeded US$ 14 billion between years 1999 and 2009 and it is projected an investment of US$ 37 billion in the coming years . Peru is one of the few countries with non‐ metallic minerals deposits.
MINING SECTOR Mining Sector Exports per destination market (2009) Mining Exports (US$ million) Copper Gold ITALY GERMANY BRAZIL Molybdenum SPAIN Lead Tin KOREA Silver Iron JAPAN OTHER Other SWITZERLAND Source: Adex DataTrade, BCRP and MINEM
TEXTILE SECTOR Recognized quality of Peruvian pima cotton, considered one of the most demanded and finest fiber in the world. First world producer of the finest South American camelids fibers: alpaca and vicuna. Long textile tradition, favors workforce professionalization and training. International recognition as “full package” supplier of the best brands in the world. Sound trend towards exports growth, reaching its maximum level in 2008: US$ 2 billion.
TEXTILE SECTOR Apparel exports main destination countries (2009) Textile‐ Apparel Exports (US$ million) 2,500 ITALY FRANCE GERMANY UNITED KINGDOM 2,006 2,000 1,495 1,500 1,000 500 OTHER 0 UNITED STATES 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 APPAREL TEXTILE Source: Prompex
FORESTRY SECTOR Presence of great biological diversity and highly valued timber. Development of hard tropical timber in the forest and soft timber in the highlands of the country. 2nd country with the largest natural forest area in Latin America. 78,8 million ha of natural forests, 10 million ha for reforestation and other areas for afforestation (plantations). Forestry products exports grew to US$ 296 million in 2009. Investment opportunities industrial timber complexes. in
FORESTRY SECTOR Exports per country, 2009 Timber exports (US$ million) 250 200 150 Hong ‐kong Italy Dominican Republic United Canada Others States Mexico 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Adex DataTrade
PERU: TOURIST DESTINATION OF LOCAL AND INTERNATIONAL INVESTMENT TOURISM SECTOR Important cultural destination due to Inca and Pre‐ Inca cultures archaeological sites. Machu Picchu was chosen as one of the new 7 Wonders Worldwide. Diversity of natural landscapes. Destination for bird and orchid watchers. Lima is the gastronomic capital of Latin America. Peru has the largest number of gastronomy schools in the world. Significant investment in hotels of international recongnition. Tourism attractions yet to be explored: North ‐ Eastern tourism circuit: Kuelap, Sipan, Chan Chan, among others.
TOURISM SECTOR Tourist Entry (thousands) Tourists arrival per origin region (2009) 2500 2139 2057 1916 2000 1720 Europe 1570 North America 1500 1349 1070 998 South America 1000 500 0 2002 2003 2004 2005 2006 2007 2008 2009 Source: MINCETUR.
REAL ESTATE SECTOR Construction GDP annual average growth for 2010 is 14.4%. Housing deficit affects 25% of households. Lima holds 25% of total deficit, and 48% of quantitative deficit. There are several programs for housing financing, based on households’ socio ‐ economic conditions and income level: Techo propio, Fondo Mi Vivienda and Commercial Banking. Mortgage credits grew an average of 25% in the last 4 years; construction credits grew 33%.
DEVELOPMENT OF THE REAL STATE SECTOR Housing deficit (2009) Mortgage credits and construction credits (US$ million) 5,000 4,357 4,500 4,000 3,500 Quantitative deficit 3,697 389,712 20% 3,000 2,500 2,000 1,500 2,742 Qualitative deficit 1,577,438 80% 2,221 1,000 500 621 584 443 248 0 2006 2007 2008 2009 Cráditos credits MortgageHipotecarios CréditosConstructionConstrucción para credits Source: Ministry of Housing
WHY INVEST IN PERU? 1. Internationally acknowledged macroeconomic stability 2. Friendly investment environment 3. Open trade and market access policy
1. MACROECONOMIC STABILITY Peru will continue leading regional growth. Gross Domestic Product (US$ Million ) 200,000 Gross Domestic Product (Annual % variation) 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 8.8 10.0 Peru Colombia Chile Brasil Bolivia Argentina 0.9 0.8 ‐1.5 ‐0.2 0.9 0.0 Projection 2010 4.7 5.0 4.0 3.4 5.0 2009 7.5 7.5 ‐5.0 Source: Central Reserve Bank of Peru. * Projections Source: IMF
1. MACROECONOMIC STABILITY Private investment (% GDP) Balance of Trade (US$ Million) 25.0 20.0 15.0 10.0 5.0 0.0 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 ‐5,000 Total exports Total imports Balance of Trade Source : Central Reserve Bank of Peru *Projections Source : Central Reserve Bank of Peru * Projections
1. MACROECONOMIC STABILITY Public Debt (US$ GDP) Source: Central Reserve Bank of Peru * Projections Central government tax revenues (US$ GDP) 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Source: Central Reserve Bank of Peru * Projections 50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0
1. MACROECONOMIC STABILITY Inflation in Latin America (Accrued) Exchange Rate in Latin America (Index 2000=100) 200.0 190.0 180.0 170.0 160.0 150.0 140.0 130.0 120.0 110.0 100.0 90.0 80.0 70.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 ‐5.0 Argentina Chile Bolivia Colombia Brazil Peru PERU BRAZIL CHILE COLOMBIA Source: Latin Focus Consensus Forecast * Projections Source: IFM * Projections
1. MACROECONOMIC STABILITY Net International Reserves (US$ Million) 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Source : Central Reserve Bank of Peru *Projection Investment grade Latin America benchmarking Source : Standard & Poor`s, Fitch Ratings y Moody´s
2. FRIENDLY INVESTMENT ENVIRONMENT Peru offers a favorable legal framework for foreign investment ... Non discriminatory treatment. Peru offers to foreign investor the same treatment as local investors. Unrestrictive access to most economic sectors * Free transfer of capital Free competition. Guarantee for Private Property Freedom to purchase stocks from locals. Freedom to access internal and external credit. Freedom to pay royalties. Network of investments agreements and member of ICSID and MIGA Peru is adherent to the OECD Declaration on International Investment and Multinational Enterprises. *Investments that require authorization: Located within 50 km in the border line and those destined to arms, ammunitions and explosive. Likewise, a principal local partner for investments in radio and television as well as in air transport is required. Legal Framework: Constitutional provisions, “Law for the Promotion of Foreign Investment”, Legislative Decree N° 662, “Framework Law for Private Investment Growth”, Legislative Decree N° 757, “Law for the Promotion of Private Investment in Infrastructure and Public Service Works”, Approved by Supreme Decree N° 059 ‐96 ‐PCM
2. FRIENDLY INVESTMENT ENVIRONMENT LEGAL STABILITY AGREEMENTS Peruvian Government guarantees through this regime RECEIVING COMPANY Stability of the recruitment regimes. Stability of the regimes for the promotion of exports. Stability of the Income Tax Regime INVESTORS Stability of the right to non discriminatory treatment. Stability of the Income tax rules applicable to dividends. Stability to use freely the most favorable exchange rate available in the market. Stability of the free availability and remittance of foreign currency, dividends and royalties regime. Requirement : Minimum investment of US$ 5 MM in any economic sectors. US$ 10 MM for hydrocarbon and mining sectors. Validity: 10 years. Concessions: Term according to the contract ’s life (Max. 60 years).
2. FRIENDLY INVESTMENT ENVIRONMENT A steady tax regime: *Tax applicable up to 2009. The pertaining rate shall be paid in 2010.
2. FRIENDLY INVESTMENT ENVIRONMENT Special Regime of VAT Anticipated Recovery BENEFITS Granting the return of the Value Added Tax during the pre ‐ productive stage of the project (minimum 2‐ year term). Applicable to all sectors of economic activity. For agricultural activity it is not necessary to meet a minimum investment amount. For other activities the minimum investment amount is US$ 5 million. The project can be divided into stages, phases, or similar levels.
2. FRIENDLY INVESTMENT ENVIRONMENT Reduced tariff structure with low tariff dispersion. Source: MINCETUR – Ministry of Foreign Trade and Tourism
2. FRIENDLY INVESTMENT ENVIRONMENT Recognition of a favorable Investment environment Due to its investment climate Peru is the most attractive country in the Region Doing Bussiness 2011 Peru ranks second in the region as an atractive country for investment. Guyana 100 172 Venezuela Colombia 39 Ecuador 130 Surinam 161 Brazil Position 1 2 Country Mexico Peru 127 Bolivia 149 Peru 36 Uruguay 124 Chile 43 3 4 Colombia Chile Argentina 115 5 Puerto Rico
2. FRIENDLY INVESTMENT ENVIRONMENT Recognition of a Favorable Investment climate World Economic Forum Getulio Vargas Foundation Peru ranks first in the ranking of Peru is first in the region for Peru tops a global macro‐ business climate in Latin America government readiness for private prudential indicator ranking investment in infrastructure Position 1 2 3 4 5 6 7 8 9 10 11 12 Country Peru Colombia Chile Uruguay El Salvador Bolivia Brazil Dominic. Rep. Mexico Guatemala Venezuela Argentina Points 5.8 5.6 5.5 4.8 4.6 4.5 4.2 4.2 4.1 4.0 3.2 3.1 Position 1 6 8 9 10 11 17 35 39 41 51 Country Peru China Switzerland France Netherlands Mexico Argentina Brazil Chile Colombia Venezuela Points 6.53 5.82 5.70 5.49 5.48 5.43 5.30 4.78 4.66 5.51 3.18 Position 1 2 3 4 5 6 7 8 9 10 11 Country Peru Brazil Chile Paraguay México Uruguay Colombia Ecuador Bolivia Argentina Venezuela ICE* 5.0 4.6 4.3 3.9 3.7 3.3 3.2 2.6 2.4 2.0 1.6 Source: World Economic Forum, Benchmarking National Attractiveness for Private Investment in LA Infrastructure. 2007 Source: World Economic Forum, The Financial Development Report 2009. *Economc climate index Source: Foundation of Getulio Vargas de Brasil 2009.
2. FRIENDLY INVESTMENT ENVIRONMENT Recognition of a Favorable Investment climate. United Nations Conference on Trade and Development. In 2009, Peru was third in FDI growth. The Economist Peru ranks first in the region for best legal and regulatory framework Italia Germany PeruPerú Dinamarca Italy 75.5% Peru Mexico Brazil Alemania 40.7% 28.1% Denmark 3.2% Source: The Economist 2009. Source: UNCTAD 2009.
2. FRIENDLY INVESTMENT ENVIRONMENT Investment Agreements Peru has signed Bilateral Investment Treaties (BIT) and Free Trade Agreements that underpin its liberalization policy. Germany Argentina Colombia Paraguay Venezuela Belgium and Luxemburg Denmark Spain Finland France Nederland Italy Norway Portugal United Kingdom Czech Republic Romania Sweden Switzerland Canada* Australia China* Korea Malaysia Singapore* Thailand Japan United States* Cuba El Salvador Bolivia Chile* Ecuador * FTA It has also signed double taxation agreements with Brazil, Chile and Canada.
3. PREFERENTIAL ACCESS TO THE MOST IMPORTANT MARKETS An economy working to become globalized and with access to the world’s largest markets and trade blocs. Agreements under negotiations Transpacific Partnership Agreements (Vietnam, Brunei, Darussalam, Australia, Malaysia, New Zeeland, Chile, EEUU, Peru) FTA Central America Agreements n force Agreements soon enter into force
PORTFOLIO PROJECTS FOR 2011 Projects in Proinversion’s Portfolio 53 projects* 33 projects prioritized for 2011… Updated: January 27, 2011
PORTFOLIO PROJECTS FOR 2011 Expected date of Award II Q 2011 IV Q 2011 IV Q 2011 IV Q 2011 Jul ‐2011 Sector / Project Airport International Airport of Cusco* Agriculture Chavimochic project phase 1 – third stage * Water reinforcement of Pisco River and Seco River Basin * Developed Choclococha Project * Sale of Lands Majes (1,000 Has) * Projects declared of National need and prioritized for 2011. Estimated Investment 379.00 265 350 130 5
NEW INTERNATIONAL AIRPORT OF CHINCHERO ‐ CUSCO Location: Chinchero District, Urubamba The Call for Tenders was made Province, Cusco region. Description: The project comprises the design, construction, financing, administration, operation, maintenance and exploitation of the new international airport of Chinchero – Cusco (AICC); and the administration and operation of Alejandro Velasco Astete (AIVA) up to AICC begins operations. Estimated investment: US$ 379 Million (VAT included) Concession term: 30 years Modality: Comprehensive Project Bid • • • Current status: The Tender Documents and contract ’s second version are published on ProInversion’s web site. Short listing bidders (Submission of Envelope N°1): Up to April 15, 2011. Award date: II Quarter 2011
CHAVIMOCHIC PROJECT (1ST PHASE – 3RD STAGE) Location: Department of La Libertad Description: Development of the first phase of the third stage of Chavimochic project to assure the watering for permanent farming in the valley and inter valleys areas of Chao, Virú and Moche. The concessionaire must build a reservoir (Palo Redondo) of 150 MMC of capacity to achieve a regular watering in 60, 000 has. This automation system includes a flow and use of groundwater in the Chao, Viru and Moche valleys. The concessionaire will be responsible for the Operation ad Maintenance of the whole system. The regional government of La Libertad is carrying out complementary works. The investment made in the first and second stage border US$ 850 million and currently the regional government is building civil works for US$ 53 Million. • Estimated investment: US$ 265 Million (first phase of the third stage) • Concession type: Co ‐ financed. Current process status: Re evaluation of the project engineering and the cost. Award date: IV Q 2011 TO BE CALLED
WATER REINFORCEMENT OF PISCO RIVER –RIO SECO RIVER BASIN POR CONVOCAR TO BE CALLED Location: Departament of Ica, Province of Pisco. Description: Collection and regulation of Pisco River water surplus to achieve the water flow stabilization of Pisco valley and the recharge of the ground water source of the inter‐valley where the Villacuri and Lanchas irrigations are located, in order to permit the sustainability of production activities of Pisco Viejo valley and Villacuri and Lanchas irrigations, which are exclusively irrigated with ground water. Ica Estimated investment: US$ 350 Million. Concession type: Cofinancing. Current status: Final stage of the feasibility study. Deadline to be Short listed: III Q 2011 Award date: IV Q 2011
DEVELOPED CHOCLOCOCHA PROJECT TO BE CALLED POR CONVOCAR Location: Department of Huancavelica, Provinces of Huaytara and Castrovirreyna, Districts of Santa Ana and Pilpichaca. Description : The project comprises the implementation of the regulation system and current connection with the construction of Tambo dam and Ingahuasi collecting water canal of 72 km length; as well as the operation and maintenance of the whole system. The goal of the project is to achieve the water reinforcement of Ica Valley, in order to provide growth and sustainability to the largest agro export center of the country located in said Valley and the operation and maintenance of the whole system. Estimated Investment: US$ 130 million. Concession Type: Co financing Process status: Waiting for the viability from the SNIP . Deadline to be Short listed : III Q 2011 Award Date: IV Q 2011 Huancavelica
MAJES I (1000 Ha) LAND SALE TO BE CALLED POR CONVOCAR Location: Department of Arequipa. Description : Sale of 02 plots of unsuitable lands with the possibility of obtaining rights of use of water resources of up to 13500 m3/ha/year for approximately 500 ha each. The plots are located in the lower area of Pampa de Majes, at Km 890 of the South Pan‐American Highway, between Majes and Siguas valleys. The Award, grants to the respective bidders the right to Arequipa exercise the Option to Purchase another lot next door from similar extension, on condition to obtain water from Majes irrigation surpluses (valid for up to 03 years) . • • Estimated Investment: US$ 5 million. Modality: Public Auction. Award Date: July 2011 Proyecto Majes-Siguas
PORTFOLIO PROJECTS 2011 Expected date of Award 03.24.2011 03.31.2011 04.07.11 III Q 2011 05.05.11 05.19.11 IV Q 2011 IV Q 2011 IV Q 2011 IV Q 2011 IV Q 2011 IV Q 2011 05.15.2011 Sector / Project Energy Energy from Hydroelectric Power Stations 500 Mw.* Transmission Line Trujillo – Chiclayo ‐ 500 KV and associated sub stations* Cold Reserve: 200 MW‐ Plant of Eten (Lambayeque)* Transmission Line Moyobamba – Iquitos* Transmission Line Cajamarca – Caclic – Moyobamba* Supply system of LPG for Lima and Callao* Bayovar oil hub Supply system of LNG for domestic market * Gas pipeline to Trujillo (Natural Gas) * South energy node* Distribution system of natural gas for the center – north * Distribution system of natural gas for the South * Penitentiary Facilities Electronic Vigilance Service * Projects declared of National need and prioritized for 2011. Estimated Investment 900 110 110 200 100 90 400 200 1500 1300 100 100 17.8
ENERGY FROM HYDROELECTRIC POWER STATIONS 500 Mw. The Call for Tenders was made Location: Nationwide. Description: The project comprises the supply of energy and power to the National Interconnected Electric System (SEIN), guaranteed by the construction of new hydroelectric power stations which will begin operations on 2016. • Estimated investment (IVA not included): US$ 900 Million. • Period of supply contracts: 15 years. • Competition factor: Lowest prices for energy. Current Status: The Tender Documents and contract ’s second draft are published on Proinversion’s web site. Award date : March 24, 2011.
TRUJILLO – CHICLAYO 500 KV TRANSMISSION LINE AND ASOCIATED SUB STATIONS The Call for Tender was made Location: La Libertad and Lambayeque Description: Grant in concession the design, financing, building, operation and maintenance of Trujillo – Chiclayo 550 Kv transmission line (capacity of 700 MVA, 340 Km. length aprox), aimed to increase the capacity of electric energy transmission towards the northern part of the country. • Estimated investment (VAT not included): US$ 110 Million. • Concession period: 30 years plus the construction period (30 months approx.) • Competition factor:The lowest service total cost. Current Status: The Tender Documents and Contract ’s first version are published on Proinversion’s web site. Award date: March 31, 2011
COLD RESERVE (200 MW, 1 DUAL THERMAL PLANT OF SIMPLE CYCLE) Location: Locality of Eten, Region of Lambayeque. Description: Power and energy supply to national grid as a Cold Reserve to cover emergency periods. To guarantee the supply the design, financing, construction, operation and maintenance of a new thermoelectric dual plant (diesel and natural gas) is considered. Located in the locality of Eten ‐ Region of Lambayeque (northern Peru) with a capacity of 200 MW. • Estimated Investment (VAT not included): US$ 110 Million. • Concession period: 20 years + construction period (24 months) • Competition factor: Lowest remuneration per power offered. Current Status: The tender documents are published on ProInversion’s web site. Award date: April 07, 2011. The call for tender was made
TRANSMISSION LINE MOYOBAMBA – IQUITOS 220 kV TO BE CALLED Location: Regions of Loreto and San Martín. Description: The Project will grant in concession the design, financing, construction, operation and maintenance of Moyobamba – Iquitos 220 kV transmission line, in order to increase the electricity transmission capacity to the western part of the country (regions of Loreto and San Martin) and develop the interconnection of the electricity systems in these regions with the National Grid. • Estimated Investment (VAT not included): US$ 200 Millon. • Concession Type : Self sustaining. • Concession period: 30 years plus the construction period (40 months). • Competition factor: The lowest service total cost.. Current Status: Hiring of the technical feasibility study Deadline to be shortlisting: II Q 2011 Awad date: III Q 2011
TRANSMISSION LINE CAJAMARCA– CACLIC – MOYOBAMBA 220 kV The Call for Tender • • was made Location : Cajamarca, Amazonas and San Martín . Description: To grant in concession the design, finance, construction, operation and maintenance of the Transmission line of Cajamarca Norte – Caclic 220 kV of more than 300 km length. The implementation of new sub stations in Caclic (Chachapoyas) and Moyobamba. The expansion of the sub stations Cajamarca Norte. • Estimated Investment (VAT not included): US$ 100 Million. • Concession period: 30 years plus the construction period (28 months) • Competition factor: The lowest service total cost. Current status: The Tender Documents and contract ´s first draft are published on Proinversion’s web site. Deadline to submit a short listing request: March 30, 2011 Award date: May 05, 2011
SUPPLY SYSTEM OF LPG FOR LIMA AND CALLAO Location: Southern zone of Lima The called for tenders was made Description: LPG transport system from the producer facilities to Lima province border. The project comprises the construction of: •A pipe of 250 km approximately from Pisco to terminal located between Lurin and Conchan. An initial transport of 1,000 tonnes of LPG daily is estimated. •A terminal for storage and attention to be placed between Lurin and Conchan. •Pumping station, measurement equipment, valve, pig traps and communication equipments. • Estimated investment (VAT not included): US$ 90 Million • Concession period: 20 years plus the construction period (28 months). • Competition factor: The lowest service total cost . Current status: The Tender Documents and the contract ´s first version are published on Proinversión’s web site. Deadline to submit a short listing request: March 31, 2011 Award date: May 19, 2011
BAYOVAR OIL HUB TO BE CALLED Location: Province of Sechura, Department of Piura. Description: The promotion process comprises the design, financing, construction, operation and maintenance of a liquid loading dock and storage tanks for crude and oil products. The location of these facilities would be in the Bay of Bayovar taking into account its favorable location on the Pacific Coast and its capacity to received large ships Estimated Investment: US $ 400 Million. Deadline to be short listed: III Q 2011 Award date: IV Q 2011
SUPPLY SYSTEM OF LNG FOR DOMESTIC MARKET TO BE CALLED Location: Province of Cañete, Department of Lima. Description: The system will allow the use of liquid natural gas and its regasification for emergency periods, using the existing pipeline to transport natural gas when needed. • • • Estimated Investment (Vat is not included): US$ 200 Million. Concession period: 30 years. Competition factor: Lowest service cost. Current status: The financing type to be defined . Deadline to be shortlisted: III Q 2011 Award date: IV Q 2011