INTERVIEW-Peru eyes trimming environmental red tape to free up investments -minister

by Reuters
Wednesday, 26 March 2014 21:16 GMT

By Mitra Taj and Marco Aquino

LIMA, March 26 (Reuters) - Peru's new energy and mines minister said the government is working on a package of reforms to speed up permitting for investments, including exempting some oil exploration projects from environmental impact studies.

Eleodoro Mayorga, a former World Bank petroleum economist who became President Ollanta Humala's third energy and mines minister in a cabinet reshuffle last month, said environmental permits can be needlessly burdensome in Peru.

"An environmental impact study makes sense when there's a serious impact and we're working in a delicate region," Mayorga said in an interview late Tuesday. "But there's no need to do an environmental impact study for everything. That's the problem."

Potential reforms come as Peru's fast-growing economy has slowed on weaker mineral exports and more tepid private investments. While the Andean country has adhered to orthodox economic policies for two decades, energy and mining firms often complain about the slow pace of securing approvals for projects.

Mayorga said it makes sense to let oil firms do seismic surveys in places not deemed fragile without having to carry out environmental impact studies which can take years.

"Very few countries demand environmental impact studies for seismic activities," he said, referring to the process of detecting oil deposits by transmitting vibrations underground.

The companies that end up winning a slew of oil concessions up for auction this year could be the first to benefit if the hurdle is removed soon.

The government said earlier this month that it will open bidding on six offshore oil blocks by May and tender 26 oil concessions in the jungle by the end of this year.

Humala, a former left-leaning military officer who turned to the center after being elected in 2011, has pledged to transform Peru into a net energy exporter by bolstering state energy firm Petroperu and tapping more oil and natural gas reserves.

Mayorga's proposal to exempt some seismic activities from the environmental approval has met resistance from the environment ministry, which was created in 2008 and oversees and approves the permits.

Environment Minister Manuel Pulgar-Vidal said earlier this month that the measure was being "debated" in the cabinet.

Peru, a top global exporter of copper, gold and silver, is hosting high-profile global climate change talks this year.

Mayorga said the cabinet is also considering other reforms, including a more efficient way of carrying out the so-called "prior consultation" law that gives indigenous communities more say on projects near their lands, and a new distribution of mining and energy proceeds to local governments.

"It's not about trying to throw the environment ministry out the window, or the prior consultation law, or taking money away from regional governors - no," Mayorga said. "It's about making them work better."

Mayorga declined to detail other potential changes being evaluated to lure investments or when they would be introduced.

"There isn't any one measure, it's a package of measures," said Mayorga. "We are making an effort to improve permitting...and that's going to take some time."

(Reporting By Mitra Taj and Marco Aquino; editing by Andrew Hay)

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