Peru to set up more competitive legal framework in energy sector

Aug 03, 2001 02:00 AM

Peru plans to establish a more competitive legal framework to attract investments to the energy sector, Minister of Energy and Mines, Jaime Quijandria, said. He also said that the new administration of President Alejandro Toledo will study restoring tax breaks for the mining sector that were taken away by the government of ex-President Alberto Fujimori.
"The president of the republic has given his backing for us to set up an extremely competitive framework (to attract investments for hydrocarbon explorations)," Quijandria said. He said that the incentives will be offered for a two to three year period, but will be valid for the whole life of the projects.
"We are proposing that during a period of time, from two to three years, conditions that will be valid for the life of the project..." he said. He said that the government should offer tax exemptions to compensate for "geological risk." No major hydrocarbon finds have come about despite drilling by private sector companies, he noted.

Quijandria said that more finds would help improve Peru's oil deficit, which reached $ 720 mm last year. "We are in a critical situation. We are below 100,000 bpd after having at one time reached (production of) almost 200,000 a day," he added.
He said he supported measures to offer a competitive legal framework in order to attract investments in the mining sector. But he said that his proposals have to be evaluated with Finance Minister Pedro Pablo Kuczynski and Prime Minister Roberto Danino.
Quijandria also said that he wasn't as supportive of the citizen groups trying to block development of Manhattan Mineral's Tambogrande mining project as was former energy minister Carlos Herrera. "I don't think that mining projects should be decided on by a popular vote," he said.
Some of the gold, copper, silver and zinc project's deposits are located beneath the streets of a town in northern Peru and opposition has been long-standing. He also said that the giant Camisea natural gas project is expected to be up and running by the end of 2003 or by the beginning of 2004, as scheduled.

Source: Dow Jones
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