New Peruvian government considers natural gas and hydropower sectors for public companies

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Peruvian Prime Minister Guido Bellido said the government will also seek to create new state-owned enterprises, a change for the Andean nation which in recent decades has focused on the divestiture of its state-controlled companies.

ANGELA PONCE / Reuters

New Peruvian Prime Minister Guido Bellido told Reuters on Saturday that the state plans to participate in key industries, including natural gas and new hydropower projects, under a new left-wing administration.

Bellido, the main aide to newly-appointed president Pedro Castillo, said the government would also seek to create new state-owned enterprises, a change for the Andean nation which in recent decades has focused on divesting its companies. state-controlled.

Castillo, a former elementary school teacher, and Bellido are now poised to tip Peru sharply to the left if they can overcome the significant hurdle of getting the green light from the opposition-led Congress.

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They also set up a committee to control inflation, Bellido said, and bolster the waning strength of the local currency sol, which is at an all-time low against the dollar, largely due to risk. higher policy, analysts said.

The more moderate Peruvian Minister of Economy Pedro Francke will be in charge of the committee, he said, adding: “We must stop the rise of the dollar” against the local currency Sol.

Francke was initially reluctant to serve under the more uncompromising prime minister of the newly elected party, sparking a last-minute standoff minutes before he was supposed to be sworn in to cabinet. Bellido said Francke should consult with the rest of the cabinet.

“Everything is a dialogue, no one can have an island, the economy is not an island,” he said.

Bellido, who is also a congressman from his native Cuzco region, was little known in political circles in Lima before Castillo won the presidency in June, campaigning with the Marxist-Leninist Free Peru party.

Unlike Castillo, Bellido is a longtime member of Free Peru and defines himself as a socialist.

His other priorities, he said, are to ensure that industries seek warmer relationships with the communities in which they operate and invest in protecting the environment.

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In a broad interview with the ornamental government palace in Lima, Bellido said he cared little about potential challenges from Congress, and said Castillo would not be impeached, unlike his predecessor Martin Vizcarra.

Castillo is Peru’s fifth president in five years due to ongoing political unrest. He has not yet given any interviews since taking office.

“It’s a lesson that a peasant is now president of the republic, it’s a cultural lesson,” said Bellido, referring to the background of Castillo who grew up in a poor hamlet in rural Peru.

STRATEGIC SECTORS

During Castillo’s presidential campaign, he accused the private company of “plundering” the country’s wealth and said he would seek to nationalize mining projects for natural gas, gold, silver, uranium, copper and lithium.

He then played down those comments, saying private investments would be respected.

Bellido, however, said in the interview that the state would indeed have some degree of stake in key industries.

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“Our feeling is that the strategic sectors must be in the hands of the government,” he said.

“In my opinion, natural gas is a strategic resource and must have the participation of the government (as well) as new large-scale hydroelectric projects”, he added, adding that the mining sector of the world’s second largest producer of copper would ultimately be left out. in the control of private enterprise.

Bellido’s intention to involve the government in natural gas could have important implications for the Camisea consortium, the largest fuel producer in Peru. The consortium is led by Argentinian Pluspetrol, with smaller stakes held by South Korean conglomerate SK Group, Hunt Oil and Repsol SA.

This natural gas is then liquefied by a separate consortium, called Peru LNG, which includes Royal Dutch Shell, Japanese company Marubeni Corp, SK and Hunt.

ENVIRONMENTAL RESPONSIBILITIES

Bellido was born in the Andean region of Cuzco and speaks the indigenous Quechua language, unlike most of the former prime ministers who grew up in Spanish-speaking Lima.

Castillo, who has promised to prioritize marginalized Peruvians in remote areas, quickly sent Bellido to help mediate a mining conflict near his home region. Chinese miner MMG LTD operates the Las Bambas mine, 1,100 km (700 miles) southeast of the capital Lima and one of the largest copper deposits in Peru.

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Residents in the area recently blocked off a key route that MMG uses to transport copper to a coastal port. They complain so many trucks cross a poorly maintained dirt road that their agricultural fields are spoiled covered with mineral dust.

After Bellido’s visit, residents agreed to suspend their demonstration for 60 days in search of a more permanent solution.

“In seeking high profitability, (the miners) have put aside their environmental responsibilities,” Bellido said of the dispute.

While acknowledging that Peru is a “mining country,” he said under the new administration, companies should invest more in improving relationships with local communities. But he stressed that the Castillo administration will seek to forge deals rather than stir up a confrontation with the miners.

“We must dialogue, build consensus, we will not impose anything here,” he said.

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