The Peruvian government announced a $1.3 billion aid package for Petróleos del Perú SA, known as Petroperú, in response to its urgent liquidity needs.
This support comprises an $800 million loan and a $500 million credit line, both backed by the government through Banco de la Nación.
This move follows Petroper’s liquidity alarm and subsequent weeks of government deliberation, which led Fitch Ratings to downgrade its rating to speculative.
Petroper’s financial strain stems from the Talara refinery’s construction debts, which escalated to over $6 billion, doubling the initial estimate.
The refinery is now operational, and it’s seen as crucial for turning Petroper profitable despite the increased debt burden.
However, the provided aid is less than Petroper’s initial $2 billion request, which sought a direct cash injection the government found unfeasible.
The government has also indicated a forthcoming renewal of Petroper’s board, though specifics remain undisclosed.
The financial intervention showcases strategic efforts to stabilize and profit from the state’s oil sector amid difficulties.
Background
Petroperú, Peru’s national oil company, is facing bankruptcy, as stated by the newly appointed Minister of Energy and Mining, Rómulo Mucho.
During a recent interview, he made it clear that the company’s financial recovery hinges on substantial management reforms.
Mucho dismissed selling Petroperú, highlighting significant government investments and assets infused over the years.
The minister underscored the need for immediate and profound changes in corporate governance to salvage Petroper.
He emphasized imminent changes in management and leadership, advocating for swift reforms, ideally within a month.
Petroperú’s financial woes intensified under ousted President Pedro Castillo (2021-2022).
The company aimed to complete the Talara refinery modernization, facing delays and budget overruns.
The backdrop of financial instability and management challenges highlights the urgent need for efficient reforms.
These reforms are crucial to ensuring Petroper’s viability and its ongoing contribution to Peru’s energy sector.