Peru’s government has approved a $1.75 billion financial aid package to support Petroperu, the state-owned oil company struggling with mounting debt and liquidity challenges. The emergency decree, announced on Saturday, is the latest in a series of interventions aimed at preventing the company from collapsing under its financial strain.
The rescue package includes a $1 billion short-term credit line and $750 million in temporary financial support. This move comes after the entire board of Petroperu resigned earlier this month, citing the company’s dire financial situation. Prime Minister Gustavo Adrianzen has called for “drastic measures” to stabilize the oil giant, which serves as Peru’s main fuel supplier. The government is now tasked with overseeing Petroperu’s financial obligations.
One of the key provisions of the decree transfers Petroperu’s debt payments to the Ministry of Economy and Finance. The ministry will assume responsibility for bond payments and loan repayments scheduled for the second half of 2024, including international debts and loans linked to the modernization of the Talara Refinery. The company has said it requires at least $2.5 billion to continue operations.
The decree also outlines that $800 million in loans Petroperu took from Banco de la Nación will be converted into equity for the oil firm. Additionally, Petroperu has been granted an extended credit line of $1 billion with the state-owned bank.
This is the second financial lifeline Petroperu has received this year, as the company struggles with high levels of debt, much of which stems from the delayed and costly Talara Refinery project. While the government’s support may stave off immediate insolvency, Petroperu’s financial future remains uncertain, with continued pressure on Peru’s national finances.
