The Head of State, Pedro Castillo, recalled through his social networks that both the construction of the southern gas pipeline and the massification of the Camisea natural gas nationwide are priority slogans of his management. “As the people’s government, we are and will be respectful of the freedom of business. The gas pipeline that will take gas to the south of the country is our priority, as well as its overcrowding for the benefit of all Peruvians. That is our commitment to the people and we will fulfill it, ”said Castillo Terrones.
But is it possible to respect the freedom of business – as President Castillo mentions – if he urges Congress to create a joint law on the nationalization or nationalization of Camisea gas in order to give Peruvians what their soil produces? To answer some questions we spoke with Jorge Manco Zaconetti, economist and researcher at the Universidad Nacional Mayor de San Marcos.
What is nationalization?
According to the Royal Spanish Academy (RAE), nationalize is to turn something private into a state one. For Manco Zaconetti, this concept is developed as it is in reality. “If a company has assets, liabilities and equity, all of this is private, and when a company is private – it does not matter in the regime in which it operates – it is assumed that it is subject to the private laws of the commercial companies regime,” he says. .
“So, when you want to nationalize that private social capital, it is because you want to convert it into state capital, which generates a public fact such as expropriation, which by legal mandate would have to be done through a law that demonstrates the public need and the social utility of that action because the State would have to pay a cash fair price for that expropriated social capital, “added the economist.
What is nationalization?
One of the meanings of nationalizing in the dictionary of the Royal Academy of the Spanish Language is ‘make a property or service become the property of the State’. This meaning is the one that would correspond to the context of the Camisea gas problem.
“The hydrocarbon reserves in the subsoil correspond to the nation, which by license contracts are transferred to private companies. So, if the gas already belongs to all Peruvians, the problem lies in its overcrowding, that is, that it reaches more Peruvians. That is massification, not nationalization, because the resource is already from Peru (when it is in the subsoil), but it is extracted by private parties, ”says Jorge Manco.
Nationalization and nationalization: how are they different?
To nationalize means to convert the private social capital into a state or public capital. On the other hand, nationalization would come to be a consequence of the nationalization process of a private company, that is, the political fact that will occur later, which would be nothing other than gas being at the service of all Peruvians controlled by capital state.
“The question, therefore, is: if you do not have economic resources and you have to address the pandemic, public investment and mass gas, building the network of gas pipelines in the 10 or 8 regions, why nationalize and nationalize? What is needed is to renegotiate with Camisea as has already been done on other occasions, ”says the expert.
Consequences of nationalization
The main reason why a process of nationalization of Camisea is not convenient, according to I miss Zaconetti, it is “because the Peruvian State already participates in lot 88 with a royalty of 37.24%. If we add to that the income tax, which is 30%, and to that you also add the income tax on dividends, which is 4%, the State participates with more than 50% of the income of the wealth created. So – he asks himself – why am I going to nationalize a private business that generates significant income to the State? I would lose what I have gained ”.
Another consequence for the expert would be the following: the cash payment by the State of a fair price, which implies a business valuation process, and an international litigation that would scare away private investments. According to our interviewee, these future confrontations are apparently not “on the government’s agenda.”
Consequences of nationalization
From the constitutional point of view, nationalizations are possible after the approval of a law by the Congress of the Republic., but Manco Zaconetti believes that with the current correlation of forces it would be very difficult to approve and that the fact that the president has urged the creation of a joint law is basically a provocation, a political effect to demonstrate to the population that the Executive is in favor of gas reaching all Peruvians and that Congress does not, that is, discrediting it by throwing responsibility at it.
Therefore, before nationalization and nationalization, contractual negotiation with Camisea shareholders is preferable. “Of course, it can be done de facto, as the military did in the sixties, but Peru is registered in more than eight international agreements and treaties where we accommodate foreign investments in national territory, which are legally protected. ”, Says Jorge Manco.
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