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 the government’s official website. Critics have blasted the plan as a risky privatization, and some are now seeking the ouster of Jerí’s finance minister.
Petroleos del Peru SA has become a constant drag on 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 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.
Opposition lawmaker Heidy Juárez Calle has drafted a motion to censure Finance Minister Denisse Miralles over the proposal, which could lead to her removal, according to a report from newspaper La Republica.
The draft argues that the decree is unlawful since it wasn’t first considered by Peru’s Congress, and that it improperly allocates funding, such as some 384 million soles to pay for worker dismissals and for the future management of transferred assets. It further blames Miralles for statements that have hit the value of the country’s sovereign bonds, the newspaper notes.
If supported by a majority in Congress, the motion would force Miralles to resign.
Most of Petroperu’s troubles are related to the building of the $6 billion Talara refinery, which opened in 2023 over budget and after years of delays. 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.
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