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Peru aims to lower costs of $5.6 bln metro contract-finmin

LIMA, Sept 19 The government of Peruvian President Pedro Pablo Kuczynski said Monday it was negotiating changes to shave costs off a $5.6 billion metro contract, one of two major public work projects awarded to a sole bidder by the previous government.

Finance Minister Alfredo Thorne said the transportation ministry asked the consortium that holds the 35-year private-public concession to consider building more of the 35-km (22-mile) electric railway above ground.

The consortium, Sociedad Concesionaria Metro de Lima Linea 2 SA, is controlled by Iridium Concesiones de Infraestructuras SA, a subsidiary of Spain-based Acs Actividades de Construccion y Servicios SA.

State bidding agency Proinversion awarded the project to the group in March 2014 after its competitors unexpectedly dropped out of the contest a week prior.

"The previous government left us with a signed contract and we have to seek a deal in which we can obtain benefits for the state," Thorne said in broadcast comments before Congress. "But we do not want to trigger international arbitration."

The consortium declined to comment. Iridium and Acs did not answer phone calls or emails outside regular working hours.

Thorne did not suggest any wrongdoing in the bidding process. He has previously said that the government plans to overhaul Proinversion in part to ensure auctions are more competitive.

Delays related to government permitting and the expropriation of lands have held up construction on the metro line, now about 10 percent complete, the consortium said.

The project would be the first subway line for the heavily congested Lima urban area.

Proinversion also awarded a contract for the construction and operation of a $5 billion natural gas pipeline to sole bidder Odebrecht SA in 2014.

Odebrecht is now in the process of selling its stake in the pipeline.

(Reporting By Marco Aquino and Mitra Taj; Editing by Cynthia Osterman)

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