Cosco Reduces Chancay Megaport Investment to $789 Million
Here’s a breakdown of the key data from the provided text, focusing on the changes to the Cosco Shipping Ports Chancay Perú project and its VAT benefits:
Core Issue: Modification of Investment Commitment & VAT Benefit
* The Peruvian government has modified a rule (Article 2 of Ministerial Resolution No.555-2017-MTC/01.02) related to Cosco Shipping Ports Chancay Perú’s access to the Special Early Recovery Regime of the general sales tax (IGV) – a VAT benefit.
* This benefit allows the company to get a faster refund of VAT paid during the pre-operational phase of the project, lowering financial costs.
Key Changes with the new Resolution:
* Reduced Investment Commitment: The required investment commitment has been reduced from US$1,213 million to US$789.6 million (a cut of over US$423 million).
* Unchanged Project Timeline: The project’s execution time remains the same: 10 years, 7 months, and 11 days (starting from October 20, 2014).
* Reason for Change: The modification stems from the Fifth Addendum to Modify the Investment Contract signed in December 2023.Cosco Shipping Ports Chancay Perú requested the reduction in investment commitment and an update to the execution schedule.
Cosco Shipping Ports Chancay Perú’s Explanation:
* The resolution regularizes the investment amount executed during the construction phase.
* The VAT benefit doesn’t apply to the operational phase.
* The adjustment is not related to later stages of the project.
* The total investment in the current stage is approximately US$1.3 billion. The difference between this and the US$789.6 million recognized in the resolution represents investments that don’t qualify for the early VAT recovery.
in essence, the government has adjusted the amount of investment eligible for the accelerated VAT refund, but the overall project timeline and total investment remain largely unchanged. The company clarifies that the reduction is an accounting adjustment related to wich investments qualify for the specific tax benefit, not a scaling back of the project itself.