ON THE GRID

Peru 2015 | ENERGY & MINING | INTERVIEW

TBY talks to Rosa María Ortiz, Minister of Energy and Mines, on the importance of diversifying Peru's energy portfolio to provide universal power coverage to the entire population, and developing sustainable mining practices.

Rosa María Ortiz
BIOGRAPHY
Rosa María Ortiz is a lawyer, and graduated from Pontificia Universidad Católica del Perú (PUCP). She has professional experience in a range of public institutions, with solid legal experience in Administrative, Civil, Commercial, Fisheries, Maritime, and Hydrocarbons law. She has consulted for public sector organizations, particularly on issues related to contracting, concessions, privatization, administrative law, and hydrocarbons.

As you begin your term, what are the challenges facing Peru in regards to energy and mining policy?

We must diversify our energy portfolio and generate sufficient amounts of power to meet our growing needs while simultaneously ensuring that we have a robust and dependable energy transmission and distribution infrastructure, which can sustain the development of our country in the medium- and long-term. This way we can provide a secure and dependable power distribution network that can sustain a variety of different industrial and economic needs, and also solidify Peru's long-term growth as a competitive player in the region.

At the same time, we must work toward providing universal access to electricity and power for our entire population, and have set a goal of 95.6% coverage by 2016 to this end. We must reach every corner of the country, no matter how remote, and we have to overcome some serious geographical challenges. We already have projects underway, one of which is the provision of 150,000 solar panels for homes in remote regions that don't yet have access to the national grid.

When it comes to mining, it's crucial to support and attract greater investment in the sector, while at the same time guaranteeing that these investments are socially and environmentally sustainable. It is important to ensure that mining operations are socially responsible as they can integrate business interests in the communities in which they operate. This will help counter the negative image mining has had in the country, based on past experiences in which mining companies failed to respect the rights of communities and the environment. The current dynamism we see in Peru's mining exploration and production activities is important, especially in copper, as projections for 2016 rank Peru as second worldwide in terms of annual copper production.

Peru is currently highly dependent on hydroelectric energy and natural gas. Is Peru planning on expanding its renewable energy sources like solar and wind power?

We have a legal framework in place to promote and develop renewable energy sources like solar, wind, and biomass. But as we see in most markets in the region, these technologies are still in the development and maturing phase, and we have to go step by step and use our own and neighboring countries' experiences to chart the best course possible in terms of integrating renewable technologies into the Peruvian energy grid—technologies that are economically viable, environmentally responsible, and of benefit to each and every final consumer. Our goal is to supply 5% of national energy generation from non-conventional and renewable sources. For this purpose, we hold tenders every two years to attain electricity fees that can help us reach that 5% target. We received three tenders for renewable energy contracts, with a fourth due in August. The tender in August covers 1,300 GWh of renewable non-conventional power and 450 GWh of hydroelectric power, with each hydroelectric power station to produce less than 20 MW.

How does Peru find a way to develop its abundant mineral resources while at the same time respecting the rights and well-being of local communities where mining operations are located?

The sector is operating under a new set of guidelines, ensuring that companies promote concepts like early intervention, transparency, decentralized attention to unrest, and articulated multicultural intervention, in extraction operations. The role that mining has played in the reduction of poverty and the promotion of economic and social development in the country is undeniable, and it's clear that mining must continue to be one of the driving economic motors of Peru, especially in terms of achieving our goal of true social inclusion.

We now have a legal framework that is in the interests of both the investor and the Peruvian state and people. It is a new policy and approach to mining that ensures respect for the environment and promotes social inclusion through a trinomial Investor-Community-State model in which the state accompanies the investment process from the beginning of the project to guarantee sustainable development. As such, mining continues to be a motor of the national economy.

What is it that makes Peru such an attractive destination for foreign investment in the mining sector?

Besides the huge mining potential that Peru holds in terms of proven reserves and production levels, Peru is also a safe country for investments, offering excellent opportunities in mining and energy on a global level. Peru is among the world's biggest producers of silver, copper, gold, lead, zinc, and tin.

The consistency, stability, and clarity of our judicial and regulatory framework is fundamental to attracting investment in the mining sector, considering that mining is a capital-intensive industry that requires extensive resources which mature in the medium to long term. Peru has carried out extensive reforms to mining legislation, which has led to a legal framework that promotes both national and foreign investment in the mining sector, guaranteeing equality of rights, top facilities, and security. This is what has sustained a vibrant and dynamic Peruvian mining sector that is also one of the most competitive and attractive in Latin America.

The Peruvian mining sector isn't just committed to the responsible use of natural resources, but it also seeks to create real and palpable gains for local populations and communities through their efforts to develop socially and economically sustainable growth. Modern mining pays special attention to environmental conservation, utilizing the most modern technologies, with clearly defined and planned operational frameworks for this purpose.

What are your main policy priorities for your term as Minister?

The priorities of the mining sector are to promote the new concepts with greater efficiency and efficacy, with the aim of contributing to Peru's long-term sustainable growth while focusing on issues of social inclusion, security, and professional safety and health standards. We are also working diligently to regulate informal mining operations, and create high and sustainable quality standards throughout the industry.

At the same time, we are working to ease the bureaucratic regulatory process so as to facilitate a growth in investments and attract more investors. We've been simplifying procedures, reducing terms, creating uniformity in application processes, introducing more flexible criteria for the authorization and licensing of construction and functioning in all stages of mining operations in a sector that is now worth $64 billion.

We also have certain priorities in the energy sector. These include diversifying the energy portfolio; ensuring sufficient power generation to meet the country's needs in the medium and long-term; improving the quality of the national power distribution grid; extending access to the national grid in rural and remote areas; guaranteeing a dependable power network for the people and industry; and advancing further reforms in the distribution of electricity.