Petroperu’s New Board Is Unraveling as Two Directors Quit

(Bloomberg) -- The new board of Petroperu, the country’s ailing state-owned oil company, is unraveling, with two members resigning less than 48 hours after being appointed.

It had taken Petroperu eight weeks to put a new board together, but Carlos Lezameta and Robert Mc Donald have already stepped down, according to securities filings published on Friday and Saturday. 

Business groups are also pressuring the government to remove the new chairman, Alejandro Narvaez, although it is unclear if President Dina Boluarte will do so. 

Petroperu has been struggling for years, spending $6 billion to open a new refinery that was delayed and over budget. So far this year, it has lost $745 million and needed two rescue packages totaling over $1 billion. The government has also taken over responsibility for repaying private lenders as the company doesn’t have enough cash. 

The company’s last board resigned in September accusing the state of dragging its feet to make substantial reforms, calling it a “broke” entity. The government then struggled to find replacements.

Petroperu has become a drag on Peru’s public finances, with its fiscal deficit growing to 4% of gross domestic product in part because of the money necessary to keep the oil company afloat.

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