© Reuters
LIMA (Reuters) – Peru will not grant new financial support for indebted state oil firm Petroperu, Prime Minister Alberto Otarola said on Sunday, just days after the firm said it needed funds of more than $2.5 billion.
The firm is grappling with a liquidity crisis after expenditure to modernize its Talara refinery, financed with bonds, private bank loans and state contributions, surged to a larger-than-expected $6.5 billion.
Last week, the firm said it needed a state “capital contribution” of $1.15 billion, as well as capitalization of a previous support pledge of $750 million and a guarantee for a $650-million loan.
“The money that has been requested will not be invested, for the simple reason that there are no funds,” Otarola said in an interview late on Sunday with broadcaster Latina Television.
The company was not immediately available for comment.
Otarola said the government would focus on other priorities, such as water and sanitation investments and efforts to prevent adverse impacts from the El Nino weather phenomenon.
Petroperu’s debts to the government will be rescheduled, he added. Ratings agencies stripped the South American company of its investment grade in 2022.
The world’s No. 2 producer, Peru slid into a technical recession last year hit by El Nino, lower private investment and lingering effects from social protests.
