Odebrecht selling 55 percent stake in $5 billion natgas Peru pipeline

LIMA (Reuters) - Odebrecht SA, the engineering company at the center of a massive graft probe in Brazil, is selling its 55 percent stake in a $5 billion natural gas pipeline project in Peru, the pipeline manager told Reuters on Friday.

David San Frutos said international creditors interested in financing $4.1 billion of the project had asked that it have no links to Odebrecht or the corruption probe in Brazil, known as “Operation Car Wash.”

Spanish utility Enagas SA, which now controls 25 percent of the project, is interested in buying 6 percent of Odebrecht’s stake, said San Frutos, who heads Enagas’ Peru unit.

“The remaining 49 percent will be acquired by another company or other companies” but must be approved by both Enagas and the project’s other junior partner Grana y Montero SAA, San Frutos said in an email.

Odebrecht Latinvest, the company’s investment unit for Latin America, said in a statement that it was evaluating proposals and declined further comment.

Enagas and Grana y Montero, which owns 20 percent in the pipeline concession, took over management of the project last month to distance it from the probe in neighboring Brazil, where the former head of Odebrecht has been convicted of bribery, money laundering and organized crime.

Odebrecht is selling billions in global assets, including a hydroelectric dam and a road concession in Peru, to raise capital as it grapples with rising debt in the wake of the corruption scandal, its chief executive told Brazilian newspaper Folha de S.Paulo in an interview published April 1.

San Frutos said he expects negotiations on financing on the pipeline to wrap up in July and that construction was ahead of schedule with 35 percent complete.

The Odebrecht-led consortium in Peru won the lucrative pipeline contract in 2014 after its sole competitor was disqualified at the last minute. Odebrecht’s previous plans to build a similar pipeline had been snagged on a lack of financing.

Odebrecht and state bidding agency Proinversion denied allegations from the disqualified consortium that the auction was rigged. The attorney general’s office has been investigating potential wrongdoing in the pipeline bid for more than a year, but has not presented any charges.

The pipeline is an emblematic project for President Ollanta Humala, who had hoped it would feed a future petrochemical complex and fast-growing demand for electricity.

Brazilian police said in February that they were investigating potential bribes of $3 million from Odebrecht to Humala. Humala and Odebrecht denied wrongdoing.

Writing by Mitra Taj; Editing by Tom Brown and Bernard Orr