Industry Trend Analysis - Bi-Oceanic Railway Remains Unlikely - OCT 2017
BMI View: We are doubtful that the proposed Bi - oceanic Railway mega project will see significant progress over the next several years and are not including it in our forecasts despite recent signs that the project is gaining momentum . The project, one of the largest ever proposed in Latin America, will face key challenges moving forward including financing, risk of delays , and poor relations between key governments involved.
The realisation of the bi-oceanic railway, a USD15bn mega project creating a 3,755 km rail link between the ports of Santos in Brazil and Ilo in Peru via Bolivia, will face a number of major challenges including financing, limited institutional capacity, a precedent for delays in major infrastructure development, and weak relations between the governments involved. As a result, we do not expect the project to move forward within the next several years and are not including it in our forecasts.
Our cautious outlook comes in contrast to recent signs of progress on the project. On September 1, Peruvian President Pedro Pablo Kuczynski and Bolivian President Evo Morales reaffirmed their commitment to developing the bi-oceanic railway. While a proposed railway passing through northern Peru and across Brazil (avoiding Bolivia) had been the focus of policymakers several years ago and had even gained Chinese backing, it is now clear that the southern route through Bolivia has become the preferred option of policymakers. In November 2016, President Kucyzynski expressed his preference for the Bolivian route on the grounds that it would be shorter and would have a more limited environmental impact than the northern route which would take the railway through the Amazon region. International actors including the governments of Germany, Switzerland and Spain have expressed interest in supporting the project for which feasibility studies are now underway.
|Operational Risk Particularly High In Bolivia|
|BMI Operational Risk Index|
|Scores out of 100, higher score=lower risk. Source: BMI|