OBG talks to Jorge Merino Tafur, Minister of Energy and Mines

Interview: Jorge Merino Tafur

Can Peru become a net exporter of energy in the medium term?

JORGE MERINO TAFUR: In the medium term our goal is to supply the internal market, while also striving to become self-sufficient in liquid hydrocarbons. Our large hydroelectric potential makes it possible to supply the domestic market and export the excess in the long term.

This will require significant policy adjustments, however, to ensure that the development of communities that are directly affected by these projects is prioritised. This will entail the further development of hydroelectric plants, thermal plants and competitive renewable energies, as well as efforts to decrease oil dependency, increase self-sufficiency in the production of diesel, and improve the levels of gas production and its use in projects that generate added value.

The price of electricity and natural gas in the country offers a comparative advantage with respect to our neighbours, enabling Peru to provide any excess energy to an open and competitive regional market.

What steps will the ministry take to prioritise the development of power generation assets?

MERINO: Measures will seek to guarantee the energy security required for economic growth with appropriate supply and adequate reserves. This entails the diversification and the geographic decentralisation of our electricity generation sources.

Prioritising each type of energy will be based upon the criteria for a secure energy supply and economic efficiency. Since hydroelectricity is particularly primed for development, it will be prioritised. To reduce the risk of relying too heavily on hydroelectricity, natural gas thermal generation will follow, complemented by other technologies that ensure the continued supply of reliable energy, such as biomass and geothermal, among others. All development of new generation capacity for both the coverage of demand, as well as for reserves, will be supported through long-term tenders according to our energy development plan. A primary objective of energy development is increased social inclusion, which means not only pursuing rural electrification but also encouraging the wider use of natural gas. Our priority is to grant universal access to energy.

How can Peru encourage more value-added and downstream activities in the mining sector?

MERINO: It is necessary to develop and invest in technology as well as intensive training programmes to ensure a highly qualified workforce. Additionally, we need a strong political will and a commitment from the business community in favour of a more holistic and integrated approach. To this end, we will encourage the establishment of private high-tech companies that pursue horizontally and vertically integrated investments.

The government is focused on pursuing a strategic plan that will allow for the development of our region in such a way that the critical mass of the investments in the mining, energy and hydrocarbons sectors will facilitate the development of other sectors, like infrastructure, agriculture and tourism, as well as the generation of industrial clusters.

What is being done to combat illegal mining?

MERINO: Informal and illegal mining is an issue that affects many countries in Latin America, especially illegal gold mining. In Peru we have been dealing with this problem for more than 30 years. To combat this, we are encouraging the formalisation of small-scale and artisanal miners and using the full weight of the law to discourage illegal activities.

The formalisation process began in December 2012 and the first phase has resulted in 70,000 informal miners committing to the formalisation process. Illegal mining activities cannot be formalised because they are often developed in prohibited zones or with methods that damage the environment. The government is steadfast in its prohibition of activity outside of the law, and for that reason it opts to pursue efforts through the national police and public prosecutors to fight this.