October 23, 2015 / 12:01 AM / 4 years ago

Peru Congress overrides president, boosts state energy firm

LIMA, Oct 22 (Reuters) - Peru’s Congress on Thursday overrode President Ollanta Humala and overwhelmingly passed legislation to clear the way for state-owned energy company Petroperu to control the country’s biggest oil block.

Humala had asked the opposition-controlled Congress to modify the bill last month to make clear Petroperu could only operate block 192 after Pacific Exploration and Production Corp’s current contract expires in two years.

But lawmakers voted 74-10 to pass the bill without changes late on Thursday. It is expected to become law in coming days.

The congressional wave of support for Petroperu comes ahead of 2016 elections and follows protests against the awarding of a service contract for block 192 to Pacific in August.

Critics said the government should have transferred the block to Petroperu, which has mainly refined, transported and commercialized oil for the past two decades.

The measure is not expected to directly affect Pacific’s contract, but Humala’s government has called it “a horrible sign to investors.”

It authorizes the state energy regulator to award block 192 to Petroperu. Humala had said that Petroperu could not operate the block because the company was legally bound to focus on the $3.5 billion expansion of its refinery.

Pacific declined to comment.

The fresh congressional defeat comes as Humala’s waning political support has sharpened in recent weeks.

Earlier on Thursday a lawmaker quit Humala’s Nationalist Party of Peru to protest the government’s handling of deadly clashes at a copper project last month - the second defection in recent weeks.

Vice President Marisol Espinoza has also left the party following years of strained relations.

The departures could further hobble Humala’s ability to pass legislation in Congress in his remaining nine months of office and limit his party’s reach in congressional and presidential elections next year.

Presidents in Peru cannot hold two consecutive terms.

Milton Von Hesse, Humala’s former housing minister, is now expected to be the party’s presidential candidate after other members indicated they would not seek the top job. (Reporting by Mitra Taj; Editing by Lisa Shumaker)

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