The restructuring proposals of Petro-Peru: challenges and perspectives for change

The measures proposed by Petro-Peru to restructure the state-owned company have generated various opinions and observations from experts and former officials in the energy sector. In this regard, Erick García, former Director of Hydrocarbons at the Ministry of Energy and Mines (Minem), and Fernando de la Torre, former Corporate Finance Manager at Petro-Peru, agree that while these proposals will not have a significant impact on the company's financial situation, they would contribute to regaining lost credibility in recent years and improving the internal and external image of the public company, respectively. One key point that is highlighted is the need for the support and involvement of the General Shareholders' Meeting, composed of the Ministry of Economy and Finance (MEF) and Minem. However, so far, there has been no official response from these entities due to the absence of the heads of both ministries, who were traveling in Asia at the time of the consultation. Oliver Stark, chairman of the board of Petro-Peru, has stated that these proposals are part of the first phase of a restructuring plan that will extend until 2025. It is expected that the shareholders will provide a prompt response and that measures will be implemented to reduce costs and halt the company's operational losses, as mentioned by Alfredo Thorne, former Minister of Economy. In this context, there is a need for a law to support the restructuring process and limit the interference of Petro-Peru's workers' union in the company's decisions. Carlos Paredes, former chairman of the state-owned company's board, emphasizes the importance of ensuring that decisions made by the board are effectively implemented, avoiding conflicts of interest that could hinder the restructuring process. Fernando de la Torre, on the other hand, emphasizes the importance of declaring Petro-Peru in restructuring and suspending union agreements to facilitate the transfer of personnel to Talara. However, challenges such as the labor agreement through collective bargaining are pointed out, which imply additional costs for the company. It is essential to mention that Petro-Peru's board plans to hire a restructuring company to manage the public company, which would involve an injection of funds and the implementation of measures to ensure transparency in the company's accounts. However, there are doubts about the viability of this approach, as there are questions about the ability of a private manager to control expenses and honor Petro-Peru's debts under the current conditions. Regarding Petro-Peru's financial situation, the working capital deficit of US$2.820 million until March is highlighted, resulting from the diversion of resources to finance the Talara Refinery. De La Torre proposes separating short-term cash flows through a cash flow trust as a measure to address this issue. In summary, Petro-Peru's restructuring proposals pose significant challenges involving financial, labor, and management aspects. The need for legislative support and shareholder involvement are key aspects to ensure the success of this process. Transparency in management, cost reduction, and effectiveness in implementing the proposed measures will be crucial for the recovery of the state oil company and the improvement of its credit rating in the future.