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Jorge Chavez International Airport (JCIA)

$11.54 million
Project Brief

MIGA has provided Fraport AG, of Germany, with a guarantee for $11.5 million, to cover its $12.8 million counter guarantee for a performance bond posted for the privatization of Lima's airport, Jorge Chavez International Airport (JCIA). The coverage is against the risk of expropriation (the wrongful call of the performance bond), and extends for eight years.

Peru depends greatly on its airport network because of the country's geography, and because ground handling transportation infrastructure has not been fully developed. JCIA is especially important to the country, since it is Peru's main operating international airport, accounting for 97 percent of international traffic, as well some 58 percent of national traffic. JCIA also functions as a regional hub for all cargo traffic. The airport privatization is considered by the government as a key factor in the expansion of employment opportunities, the creation of a modern transportation facility to serve as Peru's gateway to the world, and for the enhancement of tourism, an industry that the government is actively trying to expand.

The airport's privatization is expected to provide the government with additional revenues through increased income tax, custom duties, and concession fees. During the first four years of the concession, the consortium is expected to invest more than $130 million in new infrastructure, including upgrades to the current terminal, construction of a new passenger concourse, expansion and addition of new aircraft aprons and taxiways, and creation of a hotel and world-class retail center within the existing airport perimeter. Upgrades in the technology and services at the airport will create approximately 49 additional positions, mostly for expert technicians and service operators. The sponsors have instituted an employee profit-sharing plan. The majority of the goods and services required by the airport refurbishment will be sourced locally, and most ongoing capital expenditures foreseen, amounting to $1 billion over the entire life of the concession, will be sourced locally. Furthermore, the government will benefit from improvements in JCIA's operation, through a revenue-sharing agreement as well as a landing and take-off fee-sharing agreement.