The Peruvian Government has approved a US$1.75bn financing package to assist the state-owned oil company Petroperu. The package aims to address the company’s escalating debt and diminishing cash reserves through a series of austerity measures. Peru’s government approved a short-term credit line of up to US$1bn for Petroperu with the country’s national bank, as well as a US$750m for transitory financial support to help capitalise Petroperu. In return, the company is expected to reduce expenses by 10% in the last quarter of 2024 (compared to 2023), cut costs by 30% in 2025 (compared to 2024) and dispose of non-core assets.
Petroperu has faced exacerbated financial problems following the US$6.5bn upgrade of the Talara refinery, which has been funded through government contributions, loans and bonds. In February 2024, Petroperu received three government disbursements including loan guarantees amounting to approximately $1.3bn.