May 22, 2017 / 1:46 PM / a year ago

Peru cancels $525 million contract to build Chinchero airport

LIMA, May 22 (Reuters) - Peru has canceled a $525 million contract with a Peruvian-Argentine consortium to build an airport near the city of Cusco due to financing concerns, the transportation minister said late on Sunday.

The consortium Kuntur Wasi, including Argentina’s Corporacion America and Peru’s Andino Investment Holding , signed a 40-year contract to build and operate the airport in the town of Chinchero near Cusco with former President Ollanta Humala in 2014.

“The doubts have not dissipated despite the efforts we have put in... we have made the decision to cancel the contract,” Transportation Minister Martin Vizcarra said in an interview with the television program Cuarto Poder late on Sunday.

Vizcarra, who is also vice president of Peru, said the government would seek a new contract. He had previously expressed concerns the contract would leave Peru on the hook for paying off high interest rates from the consortium’s portion of the project’s financing.

Kuntur Wasi said in a statement it regretted the government’s decisions and would evaluate legal action once it was formally notified.

Public work contracts have faced increased scrutiny in Peru since Brazilian builder Odebrecht revealed in late December that it distributed $29 million in bribes in the Andean country between about 2005 and 2014. (Reporting by Ursula Scollo; Writing by Caroline Stauffer; Editing by Bernadette Baum)

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