Peru Congress approves sale of 49 pct of state oil firm's shares
LIMA Dec 12 (Reuters) - Peru's Congress passed a law on Thursday allowing the privatization of up to 49 percent of state-run energy firm Petroperu, part of a government plan to expand national refining capacity.
The new law, fast-tracked by President Ollanta Humala as a key step toward his goal of boosting domestic energy production, opens the door to the first injection of private capital into Petroperu since its formation some 40 years ago.
Petroperu's shares will eventually be listed on the Lima stock market, although the timing of an initial public offering is not known.
According to the legislation, of the 49 percent of the shares slated to be sold, at least five percent will be offered "exclusively" to the general public.
Finance Minister Luis Miguel Castilla said this week that the firm as is might be worth around $1 billion, and that its value would increase as it expands.
Petroperu is now only involved in the refining, transportation, storage and commercialization of oil products. It competes with the Spanish firm Repsol in the South American country.
Humala hopes to turn Peru into a net energy exporter by transforming Petroperu into a bigger player like Brazil's energy firm Petrobras.
The Humala administration initially planned on selling up to 20 percent of the firm's assets, but the government said last week that a bigger stake should be offered to help modernize and upgrade Petroperu's flagship Talara refinery in northern Peru.
Petroperu will borrow $3.5 billion to pay for improvements at Talara, the government said, allowing total output of 95,000 barrels of oil per day instead of the current 65,000 bpd.
The boosted capacity will help Peru refine an expected 100,000 bpd in coming years as firms like Perenco ramp up operations in the country's northern regions.
The government wants the expansion of Talara to be completed in 2017.
Petroperu was created by a military dictatorship in 1969 through a series of expropriations of private energy firms.
Former president Alberto Fujimori sold most of its concessions to private firms in the 90s, when Petroperu last pumped crude itself.
The new law was pushed quickly through Congress, which is often slow to approve key legislation because of inter-party quarreling. Humala's party controls a majority of Congress through a fragile alliance with other parties. (Reporting By Dante Alva, Writing by Mitra Taj; Editing by David Brunnstrom)