This, due to their repeated refusal to make their information transparent, especially, the restructuring plan developed by Arthur D. Littlewhich “They didn’t want to give it to us”reveals Víctor Góbitz, president of the SNMPEin this interview.

LOOK: Total investment in the Talara Refinery has quintupled the initial estimated budget: it now exceeds US$6.5 billion

Has the SNMPE assumed a position on the new financial rescue that Petro-Perú requests from the Government? I say this because the state oil company is part of the mining-energy union.

First I must comment that Petro-Perú resigned from being part of the SNMPE last year. Without a doubt, because we had different points of view and we did not share them. That’s important to know.

You point out that Petro-Perú withdrew from the SNMPE last year. Are you referring to 2023, that is, very recently?

That’s right, he resigned in 2023 because, of course, in the SNMPE we have a Code of Conduct and based on that we have every ability to ask our associates: ‘Please give us this information’, or, as now: ‘Please clarify this point for us’. AND Petro-Peru does not want to clarify anything. So, that’s a lack of transparency. A public company has to have a very high level of transparency.

What type of information did Petro-Perú not want to provide?

There is a report (restructuring plan) from a firm, Arthur D.Little, which we asked them and they didn’t want to give it to us. So what does this reveal to us? Lack of corporate governance. If I manage a company according to my criteria and I am not accountable to anyone, but when I fail I have to request a financial rescue, there is an underlying problem.

In July 2023, Petro-Perú’s board of directors approved the restructuring plan presented by Arthur D. Little. To date, however, it has not made its content public. Worse still, he has rejected requests from the SNMPE to reveal them.

Would it be possible for Petro-Perú to return to the SNMPE?

Definitely. If the company is managed with transparency and with an independent board of directors made up of experienced and qualified professionals, who respond to its decisions, in good time, they can return to the SNMPE. But more important is to make it clear that the financial rescue they are asking for, which is practically unavoidable, cannot be managed by the same officials who have failed.

Who have failed? The president and the members of the Petro-Peru board? And also the Minister of Energy and Mines, who has not renounced being an official of Petro-Perú and who designs standards tailored to this company?

It’s all that. In a private company what one has to avoid are conflicts of interest. I cannot be judge and party. I can’t have the worker’s hat and also the director’s hat because the roles get confused. That is one of the many issues that must be corrected.

What other issues need to be corrected?

Clearly, there has to be a restructuring plan that must be known, because it is not just about giving more money to Petro-Perú. The important thing is to see what we are going to do so that the company become solvent againand what do we have to do so that the company pay what you owe to all your creditors.

If I understand correctly, in the SNMPE they think that the rescue is unavoidable and that it must be given to Petro-Perú?

When we say that it is unavoidable, it does not mean that the Government should grant a rescue to Petro-Perú as it is managed now. There has to be different management, a different board, transparency and eliminating all conflicts of interest. That’s what has to happen. It’s not ‘give me the check and we’ll continue as we are.’

Well, in 2022 the MEF demanded a restructuring plan from Petro-Perú in exchange for bailing it out financially. It would be insisting on the same thing.

This cannot be more of the same. We must not forget that Peru has macro-economic goals and ratios to meet. So, another unconditional rescue of Petro-Perú puts the country’s investment grade at risk. That’s how important the topic is. There has to be a well-designed decision that minimizes the impact on the national accounts and the country’s risk rating. Yeah we keep writing checks we put at risk up to Peru’s credit rating, because it is a bottomless barrel. This is not the solution. It is more of the same.

Which is the solution then?

We have to restructure that company, and ideally we would do it through a bankruptcy process before Indecopi, but that is very difficult in the current context, where the State is a shareholder.

"If Petro-Perú were a private company it would go to Indecopi to be restructured"says Víctor Góbitz, president of the SNMPE.

“If Petro-Perú were a private company it would go to Indecopi to be restructured,” says Víctor Góbitz, president of the SNMPE.

Should Petro-Perú enter Indecopi as would happen with any private company?

In a situation like this, a decision must be made. If Petro-Perú were a private company it would go to Indecopi to be restructured. But when a company restructures, it is the creditors who have to make that decision.

But that is something the Government will never let happen.

Surely, it is an extreme measure that I am proposing, but the solution that there has to be is a change in the way this business is operated. And that begins with the departure of the current managers. History is telling us that They have not made the right decisions and have not followed the proper procedures. The solution is not to close Petro-Perú, but a restructuring is required that will require a different corporate governance.

In the SNMPE you don’t believe that Petro-Perú should be closed or sold?

That could happen in an ideal world, but we have to be pragmatic. The size of the company, its history, its number of workers and the geographical spread in the role it plays in the economy is not minor. This is not a restaurant that I can close for not being efficient. But I also have to be pragmatic and serious in pointing out what the root cause of the problem is.

What is the root of the problem?

The reason is that they have been taken lousy investment decisions. The best example is the investment in the new Talara refinery that got out of control.

We are talking about an investment that already exceeds US$6.5 billion.

What this reveals is the lack of robust corporate governance, which has transparency, independence and professionals with more knowledge, capabilities and responsibility. This is possible? The answer is yes. He Central Reserve Bank of Peru is an example of that, because it has an efficient directory. That is what we have to achieve.

Peru-Petro officials are going to have (legal) problems for delivering oil lots to Petro-Perú because they are only going to help this company "make cash"but they will condemn the oil wells to inefficiency, indicates Víctor Góbitz.

Peru-Petro officials are going to have (legal) problems for delivering oil lots to Petro-Perú because they are only going to help this company “make cash”, but they will condemn the oil wells to inefficiency, indicates Víctor Góbitz.

Does Petro-Perú have to aspire to function like the BCR?

Let me use this simple example. Petro-Perú is like the young man who asks his father for his credit card for Buy a Toyota, but come back with a Lamborghini. That’s the problem. Due to this lack of corporate governance we now have a project that, although it was necessary to desulfurize fuel production, should have been in the order of US$1 billion, but has ended up costing US$6 billion.

Was it a bad investment decision, then?

Basically, because a new refinerywhen you only had to modernize the existing. And it is a refinery with a very high standard, which could well have been built that way, but with financial support. And that doesn’t exist. On the other hand, the solution does not lie in granting oil wells to Petro-Perú because it is only a palliative.

But Petro-Perú points out that this will help oil production and the country.

That is misleading and not addressing the underlying problem. With this, Petro-Perú generates cash for the next two years, but it does not solve its long-term problems. On the contrary, it creates a problem for the country because those lots, without exploration, become inefficient. These wells require reinvestment and companies that execute it, with financial solidity, which is not the case of Petro-Perú. If it wants the oil lots to relieve itself financially, we are not resolving the underlying issue.

But isn’t the responsibility only Petro-Perú?

The responsibility of Peru-Petro is missing there, which has a clear mandate that it is not fulfilling. Those officials (from Peru-Petro) are going to have problems because, by handing the wells over to Petro-Perú, what they are trying to do is save you financially in the short termbut they are not solving their underlying problems.

“If the Government wants to show good corporate governance, it should say who makes up that commission (that will evaluate the rescue of Petro-Perú) because what is at stake is the money of all taxpayers.”

If this happened in a private company, would all those directors and officers be out?

That’s how it is. Everyone would be in his house. But not only do they not leave, but on top of that, they want to continue making the decisions.

Finally, will you be paying attention to what happens this week with the new rescue of Petro-Perú?

Yes. There is talk of a working group that will evaluate this issue. It would be important to know who makes them up so that their results do not have a political color. This must be a technical-financial decision. (The working group) must be made up of people who know the hydrocarbon market, not only in Peru, but in the world, so that you can make the best decision. If the Government wants to show good corporate governance, it should say who makes up that commission because What is at stake is the money of all taxpayerss. That is a bill that we are all going to pay.

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