Arequipa: signing of addendum 13 will prevent the end of Majes II

By: Elizabeth Huanca Urrutia

The signing of addendum 13 of the Majes-Siguas II project would be the only option for the Regional Government of Arequipa (GRA) to avoid the expiration of the contract for the agro-energy mega-project.

On January 10, Angostura Siguas, the concessionaire in charge of the Majes II works, sent a letter to the GRA, where the accuses of four breaches of contract. It indicates, not having handed over control of the project (lands of Pusa Pusa and Tarucamarca), not complying with the delivery of the sovereign guarantee of the RPI (Annual Recovery of Concessionaire Investments), not preparing the environmental study of the Condoroma dam and, the non-signature of the addendum 13. Under this justification, the contract expiration process began.

The manager of Autodema, Arturo Arroyo revealed that, in a week, the regional governor Kimmerlee Gutiérrez will formally respond to the letter. It is previously known that The extension of the deadline will be insisted on giving the option for the addendum to be discussed by the Regional Council of Arequipa (CRA). The GRA trusts that the directors will allow Gutiérrez to sign the addendum and the project to be reactivated in a month.

Addendum 13

The official recognizes that the GRA has formally breached -in part- the contractual commitments of the contract, whose validity expired on December 30, 2021. In that line, he clarifies that only with the approval of Addendum 13 “the terms will be restored.” and the GRA will have the time necessary to comply with the pending commitments. “Without the signing of the addendum, formally all the terms would have already expired.” However, in an eventual arbitration, the GRA would have everything to lose.

Arroyo, together with the manager of the Majes-Siguas II project, René Cruz and the president of the Regional Council, José Luis Hancco, gave a press conference yesterday to clarify the observations that Cobra puts as justification to terminate the contract and the steps to take to avoid it . From the appointment it was clear that the GRA will insist on moving the project forward. Meanwhile, the CRA shows willingness to approve addendum 13.

In the afternoon, the GRA issued a statement. In this, the Governor Kimmerlee Gutiérrez, expresses its commitment to carry out Majes II. Remember, in addition, that all the documentation was sent in a timely manner to the regional council and the Agriculture commission so that they can prepare the opinion and debate the addendum.

Clarifications

In yesterday’s quote, Arroyo explained Cobra’s observations. Regarding the handover of control of the project, he clarified that on September 9, 2016, the GRA handed over 90% of the Pusa-Pusa and Tarucamarca properties (14 properties), impact zones where the Angostura dam will be located, which will provide of water to Majes. He recalled that as a result of this, the concessionaire has executed works of the first phase, such as roads and camps. All that remains is to deliver plot 7 of Pusa Pusa, which “has already been purchased and registered.

However, he accepted that there are pending aspects, such as the signing of agreements with the owners of Tarucamarca. These expired on December 31, 2021. With their reactivation, the concessionaire will have full possession. With addendum 13, they would have 120 more days to regularize the issue.

Regarding the sovereign guarantee for the concessionaire’s annual investment recovery, he explained that between 2016 and 2018, the GRA moved forward with the contract for the National Government to sign it. Once the addendum is approved, the Executive would sign the guarantee. This document is key for the company to make the financial closing.

Regarding the preparation of the Environmental Management Adaptation Program (PAMA) for the Condoroma dam, an obligation of the concessionaire (according to addendum 12) and that the GRA assumed by mutual agreement, he explained that in December 2021, it was already concluded. It only remains for the Ministry of the Environment to approve it.

Counselors seek to save liability for addendum 13

The expiration letter of Majes II would have apparently caused the change of attitude of the president of the CRA, José Luis Hancco. The latter was flexible and willing to approve the addendum. Everything indicates that the council seeks to save responsibilities.

Hancco explained that in the ordinary session of Tuesday, January 18, the terms of the opinion in favor of Majes will be evaluated. He urged the members of the group to speed up the deadlines.

Councilor Harberth Zúñiga recalled that before discussing the issue, an agreement should be established between the GRA and Cobra, where terms are extended. Arroyo points out that even without the act, progress should be made on the issue as a sign to Cobra that the intention is to reactivate Majes.