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Sustainable urban transport in Peru

KfW is promoting the expansion of local public transport and cycle paths

Red cycle path next to a busy road in Peru.
So far a rarity: first cycle paths in Peruvian cities.

There are very few local public transport services or provisions for cyclists in Peru. Lima has only one metro line at present, while the other cities have none at all. KfW has already provided promotional loans totalling EUR 40 million for sustainable transport concepts; on behalf of the German Federal Government, it is now extending the measure and investing a further EUR 80 million.

Every year in Peru, permits are issued for around 200,000 new cars. Cities are densely populated, with air pollution already at very high levels. To date, there have been very few alternatives to cars: Lima is the only city with a metro line and a single express bus route, both of which are heavily overcrowded as a result. The city’s few cycle paths are not connected to one another and are therefore barely used.

This is why KfW has already supported Peru by providing two promotional loans, each worth EUR 20 million, to expand local public transport . Added to this was EUR 4 million of grant funding from the budget of the NAMA facility (Nationally Appropriate Mitigation Action – an international climate financing programme with donors including the German Federal Ministry for the Environment and the United Kingdom) which was used to implement measures to protect against the impacts of climate change. In late October 2020, a new commitment was made to provide two further development loans of EUR 40 million each on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ).

The multi-phase project supports the expansion of the public transport network in the Lima metropolitan area and promotes alternatives to car usage. The transport sector is being modernised; the reforms needed to facilitate this are being introduced. An important prerequisite is that the institutions have the expertise and structures that they need to actually implement sustainable urban transport planning in practice. So the measure supports the development of these qualifications.

In both phases of the project to date, support was provided to establish a transport company (Autoridad de Transporte Urbano para Lima y Callao) that will create an integrated offering in the metropolitan area, and a master plan for the public transport network was developed. In addition, Peru is making significant investments in Lima’s metro lines. Alongside these aspects, the measure promotes non-motorised transport. To this end, the Peruvian government was supported in passing legislation to recognise and promote bicycle use as a sustainable mode of transport, and in creating cycle paths.

Panoramic view over Lima.
Traffic jams and high levels of air pollution are part of the daily picture in the Lima metropolitan region.

Within the Ministry of Transport, a dedicated organisational unit has been created for urban mobility – a key prerequisite for continuing to roll out the projects in the municipalities. The measure is structured as policy-based lending, meaning that the funding is linked to reforms that are agreed in partnership. Funds are only paid out once these reforms have been implemented.

The Federal Ministry for Economic Cooperation and Development’s new commitment will drive the continued successful modernisation of Peruvian public transport. The measures are being implemented not only in Lima, but also in other cities like Arequipa, Trujillo, Piura and Cusco. Specifically, they involve introducing express bus lines, tram lines and the integration of various public transport options in the individual cities. Furthermore, based on the reforms that have been introduced, EUR 20 million was granted to the city of Lima in October in the German-Peruvian government negotiations for the continued expansion of its cycle path network.

The reform programme is helping the Peruvian Ministry of Transport to structure and then implement important reform measures. The expansion of sustainable transport reduces greenhouse gas emissions, making a valuable contribution to implementation of the national measures (nationally determined contributions, NDCs) agreed at the climate change conference in Paris.