Incoming exec says Petropar is bankrupt

Thursday, August 14, 2003

Paraguay's state oil company Petropar is effectively bankrupt, according to Federico Zayas, who will take over as president of the company within the next few days. He was appointed by Nicanor Duarte Frutos, who will be sworn in as president of the country on Friday.

Petropar owes international fuel suppliers US$97mn and has negative equity of US$11mn, he said, quoted by local papers.

"We can say that Petropar is bankrupt," Zayas said, adding that Petropar posted losses of 232bn guaranties (today US$34mn) for the first six months of the year.

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The company is widely seen as being "totally corrupt," Zayas said, adding that he plans to bring transparency to the company's cost structure, hold public auctions for buying fuel and maintain a "reasonable" profit margin so the company can recover its financial strength.

"The challenge is big, but I am used to lifting companies up - I did it at the National Cement Industry, which was worse than Petropar. With this company the possibilities of success are more realistic," he said.

He ruled out privatization at this stage, saying the company must first put its house in order.

Zayas wants to recover some of the US$5mn owed by Paraguayan state entities, he said.

Venezuela has said it is willing to sell Paraguay cheap fuel, he said, adding that the "opportunity should not be missed."

The country's oil refinery at Villa Elisa will be one of the first restructuring targets: it currently produces 2,500 barrels a day, half of the historical production level, but maintains the same level of personnel, Zayas said.