Petroperu: too big to fail?

Petroperu: Too Big to Allow to Fail? The expression "too big to fail" has resonated in the financial world since the 2008 crisis, when large financial institutions were bailed out by the United States government to prevent a global economic collapse. Now, in a not so distant scenario, we find ourselves facing a similar situation in Peru, but with a different protagonist: Petroperu. The state-owned oil company is in a state of bankruptcy, with a debt that far exceeds its income flow. According to its interim board and its shareholders' assembly, the company is facing projected losses of over US$700 million for this year, putting it on the brink of financial collapse. The recent downgrade of Petroperu's credit rating by agencies such as Standard & Poors, Fitch Ratings, and Apoyo & Asociados reflects the increasing possibility of a default by the state-owned company. Faced with this scenario, the question arises as to whether the Peruvian government will opt for another financial bailout to avoid a possible collapse. Minister of Economy, José Arista, has announced the presentation of a plan to "make viable" Petroperu in the coming weeks. However, the company's interim board has stated that a new bailout would be "immoral" and advocates for the entry of private management, free from political influences, to pull the oil company out of the crisis. The complexity of Petroperu's situation fits perfectly into the concept of "too big to fail." Allowing the state-owned company to default could have serious consequences for the Peruvian economy, including a downgrade in the risk rating that would hinder investment attraction and limit future growth, according to capital market experts. Given this scenario, there is a need for a rescue plan that combines government intervention with the entry of independent private management into Petroperu. Reforming the company's governance is essential to ensure its long-term stability and avoid future financial crises that could impact the national economy. The question that arises is whether it is feasible to achieve this independence of private management within the current legal framework or if a regulatory modification would be required to allow majority share acquisition by private actors. Additionally, there is uncertainty about the willingness of Congress and the current government to carry out these reforms in a complicated political scenario. Ultimately, what is at stake is the future of a bankrupt state-owned company that could significantly affect the country's economy. The spotlight is on the Ministers of Economy and Energy and Mines, who will have to make crucial decisions in an urgent scenario. Uncertainty and pressure increase as time passes and the crisis at Petroperu deepens.