Peru eyes new auction for natgas pipeline contract in 2017

LIMA: Peru will hold a new auction for a natural gas pipeline project next year if financing for a project controlled by the Brazilian engineering company Odebrecht remains snagged on corruption concerns, the finance minister said.

Odebrecht, ensnared in a massive corruption scandal in neighboring Brazil, must exit the US$ 5 billion Gasoducto Sur Peruano project as a condition of banks that would provide a US$ 4.1 billion syndicated loan for construction on the project.

But Odebrecht’s attempt to sell its 55 per cent stake in the project has faced several repeated delays.

“This is a great opportunity for Peru to auction the project again. We think we’ll do it relatively quickly, it’s a very attractive project,” Thorne told reporters, adding that the government would not legally be able to take control of the contract until January.

The current contract was designed during the previous government of Ollanta Humala to transport natural gas from Peru’s abundant Camisea fields to the Pacific coast, where it would feed power plants and a future petrochemical complex.

Thorne said the government of President Pedro Pablo Kuczynski, who took office in July, would probably modify the project so it also transports gas to cities in Peru’s southern Andes and so it is not financed through consumer electric bills.

Reuters reported on Friday, citing a government source, that the government might revoke the pipeline contract so it could hold an auction to find a new builder and operator.

Construction on the pipeline was about a third finished in July.

Odebrecht declined to comment on Saturday.

Odebrecht won the rights to build the pipeline in 2014 after its sole competitor – a group led by US-based Sempra Energy – was disqualified the day of the auction for making last-minute changes to the share each company held in the consortium.

Public prosecutors and the comptroller have been investigating possible wrongdoing in the bidding process. — Reuters