Andean Development Fund approves $350 million loan for completion of Peru’s electrical urban railway

The Andean Development Fund, CAF, approved a $350 million loan to fund the completion of Peru’s Lima and Callao Mass Transport Electric System Line 1, daily Peru21 reported Monday.

Because no acceptable offer was made to the Peruvian government after it invited bids for a 30-year concession to operate the Lima-Callao urban railway, the Transport and Communications Ministry, or MTC, decided to finance the mega-project via the CAF’s $350 million loan.

“These measures will allow the population to count on a modern mass transport system that will significantly reduce the time needed for travel, urban vehicular congestion, car and bus accidents, pollution, chaos,” reads the emergency decree set forth by Peru President Alan García’s administration, which makes the loan possible.

Like in many other large cities throughout the world, vehicular congestion and air pollution are serious problems in Peru’s capital, Lima. Air pollution in Lima, which is primarily due to the high number of old automobiles and the oversupply of privately-operated public transport vehicles, has been exacerbated over the past decade by a series of policies and measures that were adopted without due consideration of their impact on the environment, specifically air pollution and air quality. The government hopes that completing the urban Line 1 of the urban railway with significantly reduce air pollution and vehicular congestion.

More than $320 million have already been invested in the existing 9.2-kilometer route, which was initially built by Italian-owned Tralima. But, by the time the railway reached Atocongo, in San Juan de Miraflores, the money had run out, and Peru entered into a deep economic crisis. Widespread accusations of mismanagement, profiteering and corruption were directed at Garcia, and the train project abandoned.

In 1985, García, 36, was swept into the presidency, obtaining a majority in Congress. Dubbed the “Latin American Kennedy” his first term began on a high note, as he raided the nation’s reserves for social spending, creating a false sense of prosperity that soon dissipated into national despair amid four-digit inflation, rampant corruption and a Maoist Shining Path guerrilla insurgency.

The projected segment will stretch over 11.7 kilometers between the Atocongo terminal and the Dos de Mayo Hospital station on Grau Avenue in Lima, and count nine additional passenger stations.

The trains – to run through Villa el Salvador, San Juan de Miraflores, Surco, Surquillo, San Borja, San Luis, La Victoria and downtown Lima – are to travel at an average speed of 40 kilometers per hour, and fares are expected to be as low as 2 soles, or $0,60.

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