How a leftist presidential win could impact Peru's energy sector

Five weeks after Peru's convoluted presidential election, the country's elections authority JNE announced the official results.

Conservative, market-oriented Keiko Fujimori will face leftist Roberto Sánchez in the June 7 runoff, which polls predict will result in a technical tie – a further sign of the political crisis that has seen eight presidents over the past decade.

"Peru’s rapid leadership turnover has been driven largely by invoking a constitutional clause allowing congress to impeach and remove leaders with a two-thirds majority for reasons of 'permanent moral or physical incapacity.' This, combined with political clashes between the executive and legislative branches, frequent scandals, and a lack of legislative majorities, has fueled chronic political instability," the Council on Foreign Relations highlights.

The political turmoil contrasts with stable economic growth, which many attribute primarily to an autonomous central bank, coupled with robust private participation and a strong natural resource base.

A Sánchez win, however, could again put this monetary structure to a test and erode the pillars that have buttressed a fragile system.

The psychologist-turned-politician and head of the Juntos por el Perú (JPP) party had been a minister under Pedro Castillo, who was impeached in 2022 after one year and four months in office.

Sánchez's government plan sets the tone for what would be his administration: "We are a left-wing party, because we are guided by a set of doctrinal ideas, by progressive citizens around the world who condemn the exploitation of man, repudiate neoliberalism and the sacralization of the market."

"We are an organization of popular origin, because we are part of the social fabric of the people (Quechua, Aymara, Amazonian and coastal), exploited workers of the city and the countryside…we declare ourselves anti-imperialist and Latin Americanist," it adds.

The JPP candidate's proposal calls for an alternative to capitalism.

"This economic system, in its neoliberal version, has been generating greater poverty and social inequality in Peru and the world; promoting, through its imperialist and irrational practices, the destruction of the planet, driving wars, the arms race, and the indiscriminate deterioration of nature."

Against this backdrop, BNamericas provides takeaways from Sánchez's 2026-31 roadmap that could impact the energy industry, which already faces its own headwinds, from a national oil company facing financial and operational distress and a lackluster upstream sector, to transmission and curtailment risk in the power sector.

Identified problems

One of the "identified problems" in the government plan is the "corporate capture of the state and monopolistic concentration in key sectors."

Strategic objectives on this front target productive sovereignty, such as national industrialization, strategic import substitution and a gradual ban on the export of unprocessed resources, and development of national value chains.

Another aim is democratizing access to markets and strengthening regulations, including demonopolization, greater regulatory power and price controls in sectors in crisis.

The roadmap also points to a "regressive tax system, with exemptions that reduce public resources to the detriment of the most vulnerable populations" and the "capture of extractive rents by large corporations."

Other objectives that raise flags are the renegotiation of strategic natural resource contracts and increasing royalties by 20%, and greater oversight and reorientation of water rights.

And Sánchez pitches the implementation of a "just" energy transition: solar, wind, small hydroelectric and gas for national industry.

A specific goal is for renewables to account for 20% of the energy matrix.

(The original version of this content was written in English)