Peru's Government Resolves Dispute With Cosco Over $1.3B Port Lease
Just days ahead of a high-profile meeting between Peru's president and Chinese President Xi Jinping, the Peruvian National Port Authority (APN) has dropped a decision that had upset China's state-owned shipping company, Cosco.
Two years ago, the APN awarded Cosco Shipping an exclusive license to develop and run a new multipurpose port at Chancay, Peru. The $1.3 billion development is a landmark maritime infrastructure project for South America, and could connect Asian shipping interests with markets throughout the Andes and even as far as Brazil - potentially circumventing the Panama Canal for some cargoes. It is Cosco's highest-profile new project in the Americas in years, and it is scheduled to open during the Asia-Pacific Economic Cooperation (APEC) summit in Peru this November - providing China with a visual centerpiece to show its growing influence in Central and South America.
In March 2024, with Port of Chancay about 70 percent completed, APN decided to make a substantial change to Cosco's permit. The agency decided that it never had the authority to grant Cosco an exclusive right to operate the seaport, and it asked a judge to annul its earlier decision. APN said that this lawsuit was simply a correction of an "administrative error," and should not affect operations on the ground.
Cosco and its bankers reacted negatively to this news, and Cosco sought to open negotiations with APN to resolve the matter. The shipping company warned that if it could not be resolved amicably, it could resort to international arbitration. Exclusive operator rights are standard for build-operate-transfer port development contracts, and are found at most of Peru's seaports.
https://finance.yahoo.com/news/1-perus-pm-says-china-170938527.html
Throughout the monthslong dispute, Peru's political leaders emphasized that they believed the matter would be resolved, and that the port would still open on time this year. With help from the Peruvian Congress, they achieved that goal. In early June, the congress passed an amendment to Peru's national port system laws, giving the APN the legal authority to formally grant Cosco exclusive operator rights. Peruvian President Dina Boluarte signed it into law on June 8.
On Monday, just four days ahead of Boluarte's meeting with Chinese President Xi Jinping, APN's lawyers asked a judge to withdraw their annulment request. The agency's decision to drop the lawsuit permanently restores Cosco's right to operate Chancay on an exclusive basis.