The Peruvian government has asked the World Bank to aid, through loans and management, the development of a better transportation infrastructure—namely in the form of road repair, continual maintenance (the creation and institutionalization of maintenance programs), road safety improvement, and MTC (Ministry of Transport and Communications) infrastructure improvement for a more efficient use of this stimulus package.
Peru's economy has seen record growth over the past few years, showing a jump from 7.7% GDP (gross domestic product) growth in 2006 to 9.8% in 2008, yet its economy has been severely hampered by low quality transportation infrastructure. About 80% of Peruvian firms surveyed by the World Bank reported that the infrastructure was of very low quality and was one of the most limiting factors to business growth. Peru's logistic costs are among the highest in Latin America.
Understandably, traffic accidents are at a level that makes Peruvian conditions some of the worse in the region—both economically and in terms of people hurt or killed. There are 42 deaths per 10,000 vehicles and 21.6 deaths per 100,000 people, with an annual rate of 3,510 deaths and 49,857 injured. According to a survey financed by the Bank (executed by iRAP), out of about 3,000 km of roads, 22% could be considered very dangerous for drivers and 63% for pedestrians.
Despite the economic upturn witnessed in over the past few years, Peru's economy has been very much affected by the global economic downturn. As a result, this stimulus package is required of the World Bank for the needs of Peru, amounting to about $150 million out of the $540 million projected cost for this project.
Components[edit | edit source]
The project includes five components:
1. Road Rehabilitation: This component will help finance the MTC's 2010 road rehabilitation and upgrading program. It will contribute to the financing or rehabilitation and upgrading works for four national road segments, totaling 183.3 km. MTC's road rehabilitation and upgrading program for 2010 aims at rehabilitating eight national road corridors, totaling sixteen road sections and representing 1,024 km.
Estimated cost: US$ 177.4 million of which US$ 103.3 million would be financed by the Bank.
2. Road Maintenance: This component will help finance MTC's maintenance program, by contributing financially to maintenance contracts on selected national roads and periodic maintenance activities. Activities include maintenance on 7.9% of the total national network. Within this component, 2,096 km of national roads will receive maintenance.
Estimated cost: US$ 264.1 million of which US$ 35.0 million would be financed by the Bank.
3. Road Safety Infrastructure: This component will finance road works to improve the road safety condition of selected national roads. Some of these roads will likely be made into "safe corridors". This component may also improve bridges and critical points that also contribute to the country's poor road safety performance.
Estimated cost: US$ 20 million of which US$ 10 million would be financed by the Bank.
4. Institutional Support and Transport Regulation: This component will finance technical assistance, institutional strengthening, and other areas of the MTC to improve the institutional performance of these agencies for efficient and effective implementation of this stimulus package. Generally, improvements will be made to the capacity for management, monitoring, and evaluation under three overall themes:
- Improvement of information management systems (such as, road and bridge asset management, emergency and incident management, contracts management).
- Improvement of road safety management and transport regulation systems.
- Improvement of management of environmental and social safeguards.
Estimated cost: US$ 3.3 million of which US$ 1.6 million would be financed by the Bank.
5. External Auditing: This component will finance the project's external audit.
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Estimated cost: US$0.2 million of which US$ 0.1 million would be financed by the Bank.