Peru does not have sufficient resources to "rescue" its state oil company

Peru does not have sufficient resources to “rescue” its state oil company

Peru will not rescue the state oil company in difficulties Petróleos del Perú SA, the country’s chief of staff said on Sunday following its request for a US$2 billion rescue package. “There is not going to be fresh money, capitalization in favor of Petroperú (…) “The decision is due to a very simple reason, that there are no funds to do so,” stated the Chief of Staff, Alberto Otárola, in an interview on the Latin news channel. “We believe there are other priorities.”

Otárola’s statements will deepen the financial crisis of Petroperú, as the company is known, which has been warning for months about its dwindling cash position. The company is mired in debt tied to the construction of a $6 billion refinery that opened late last year.

Petroperú has said it needs $1.15 billion in cash soon to pay the refinery’s suppliers and convert a $750 million loan with the government into shares. Otárola said the Government would not finance any of those things, but would reschedule debt payments. Petroperú had already received a cash injection worth US$1 billion in 2022, when it faced a similar crisis.

“We also cannot fall to the other extreme and say that Petroperú should go bankrupt,” Otárola said, without elaborating on how the company would continue operating if it runs out of cash. Petroperú also has bonds in circulation with private investors maturing in 2032 and 2047 that will help finance the construction of the refinery.