Committee approves concessions modification bill

Wednesday, July 4, 2007

Peru's congressional energy and mines committee has approved a bill the government submitted in April that would modify the power concessions law, congress said in a statement.

The initiative aims to improve conditions in order to guarantee investments by introducing adjustments to administrative procedures in the granting and modification of power rights, according to explanatory notes that accompanied the bill.

Specifically, the bill would reduce extensions for temporary concessions to one year from two for carrying out project studies and increase project financial reporting requirements, among other aspects.

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The ease with which a definitive concession currently can be secured "has permitted the... proliferation of definitive hydraulic generation concessions where execution has been extended, in some cases more than once," according to the explanatory notes.

In the period 1993-2000 nine definitive concessions were granted that represented a combined 527MW, of which only six came into operation for a combined 366MW, the government highlights.

And from 2001-06 fourteen definitive concessions were awarded for a combined 1,868MW, of which only four began commercial operations for a combined 268MW.

"This situation has created an appearance of investments in generation, which at the same time has created an entry barrier for real investors that do have the financial backing necessary to increase the electric energy generation of the country."