Brookfield Dissolves Peruvian Toll Road Unit Rutas de Lima Amid Revenue Losses and Legal Disputes

Brookfield Dissolves Rutas de Lima

Brookfield Asset Management has announced the dissolution of its Peruvian toll road subsidiary, Rutas de Lima (RdL), effective September 30, 2025. The decision comes after years of escalating disputes with the Metropolitan Municipality of Lima and other state entities, which Brookfield attributes to unsustainable revenue losses and arbitrary actions by local authorities. The company stated that revenue for Rutas de Lima has plunged by over 60% in recent years due to suspended toll collection sites.

Background of the Concession and Controversies

The concession for Rutas de Lima, which involves operating and maintaining the Panamericana Norte, Panamericana Sur, and Ramiro Prialé highway routes, was originally signed in January 2013 with the Metropolitan Municipality of Lima. Brookfield acquired a 57% stake in Rutas de Lima in June 2016 from the Brazilian conglomerate Odebrecht, which retained a 25% share. The concession was initially set to expire in 2043.

The project became a focal point of controversy following social protests in January 2017 against toll rate increases. These protests led the city of Lima to close the New Chillón Toll Unit (NCTU) and subsequently refuse to implement further contractual rate hikes. The city of Lima has consistently alleged that the original concession contract was obtained through bribery by Odebrecht. However, Brookfield denies any corruption during its ownership, and multiple international arbitration tribunals have rejected Lima's claims, finding insufficient evidence to link Odebrecht's corrupt payments directly to the Rutas de Lima concession contract.

Escalating Legal Battles and Financial Strain

The conflict intensified with Lima Mayor Rafael Lopez Aliaga, who campaigned on a promise to cancel toll payments, alleging corruption. Brookfield has initiated international arbitration against Peru, seeking US$2.7 billion in damages, alleging illegal expropriation under the Canada-Peru Free Trade Agreement. This arbitration follows previous rulings where international tribunals and a U.S. federal court ordered the city of Lima to pay over US$200 million in compensation to Rutas de Lima for breaches of the concession agreement, which Lima has reportedly refused to pay.

The financial viability of Rutas de Lima has been severely impacted by these ongoing disputes. In November 2024, S&P Global lowered Rutas de Lima's debt rating to 'CCC' from 'CCC+' due to heightened financial pressure. This was attributed to factors such as:

• No traffic growth assumptions.
• Higher operating costs stemming from ongoing litigation.
• Increased debt service due to a 2% interest rate hike on notes following an event of default in March 2024.

Despite the dissolution announcement, Brookfield has stated that Rutas de Lima will continue to operate the roads for the time being.