(Bloomberg) – Peru’s government is exploring splitting the assets of its ailing state-owned oil company, including a new multi-billion-dollar refinery that is generating losses.
President José Jerí made the announcement in a decree published less than two hours before midnight on New Year’s Eve on Peru’s official website. Petroleos del Peru SA has become a constant drag on Peruvian public finances, requiring some 17 billion soles ($5 billion) in rescue packages over the past few years.
The decree may be the most ambitious attempt yet to restructure the company, which has been struggling to meet its debt obligations without government help. The decree only talks about asset restructuring but doesn’t address the company’s debt obligations, which total about $5.45 billion, according to S&P.
Petroperu has a “structural inability to generate liquidity from its operations,” the decree says. It added that Petroperu had just 66 million soles ($19.6 million) in cash as of October. Jerí only came to power in October and has struggled to find leadership for Petroperu, appointing three board chairs in three months.
Most of Petroperu’s troubles are related to the building of the $6-billion Talara refinery, which opened in 2023 over budget and after having been delayed for many years. Petroperu issued bonds in international markets to finance the construction.
Under the decree, private investment agency ProInversion will be able to segregate the Talara refinery and other unnamed assets into separate business units. But it doesn’t say what it would do with the new units.
The decree also allows the transfer of 240 million soles to Petroperu.
