Government Policies and Programs
Peru’s legal framework regarding domestic and foreign investors is governed by Constitutional Mandates as Legislative Decree No. 662 (promotion of foreign investment), which provides unrestricted access to all economic sectors; Legislative Decree No. 757 (framework for the development of private investment), which pertains to the private investment growth; and Texto Unico Official (TUO) approved by Supreme Decree No. 059-96-PCM, which promotes private investment in public infrastructure and utility works. Within the framework of Decree law No. 708 of November 1991 (promotion of investment in mining), Legislative Decree No. 818 of April 1996 (incentives for investing in natural resources), and Supreme Decree No. 162-92-EF of October 1992 (rules guaranteeing foreign investment), more than 250 domestic stability and guarantee contracts have been signed since 1993.
Supreme Decree No. 014-92-EM of June 1992 (the general mining law) and Legislative Decree No. 868 of May 1996 (Texto Unico Official) provide guaranteed protections to mining ventures and contracts under the Peruvian Civil Code. Consequently, such ventures and contracts are immune from unilateral changes by any governmental authority in Peru without an appropriate legal or administrative remedy or arbitration by the Convenio Constitutivo del Centro Internacional de Arreglo de Differencias Relativas a Inversiones (Formal Consent of the International Center for Settlement of Relative Differences on Investments). Additionally, Peru enacted the Supreme Decree No. 047-2002-EF of April 2002 (import duties for capital goods) to reduce the duties paid to 7% from 20% and 12% on capital goods to be used in exploration and production of certain minerals, such as oil and gas in the Amazon region. The capital, goods, and services linked to minerals exploration benefited from the elimination of 18% sales tax when law No. 27623-EF was enacted in January 2002. Supreme Decree No. 015-2004-PGM of January 2004 (legal framework for decentralization) was established to use revenues from mineral production to maximize the well-being of the local communities through economic growth, environmental protection, and social development in a sustainable way. Supreme Decree No. 066-2005-EM of May 2006 (legal framework for creation of the Dirección de Gestión Social) was established to administer the Corporate Social Responsibility program in the mining sector.
The Peruvian Constitution establishes equal protection for domestic and foreign investors who may enter into agreements with the Government and guarantees free access, possession, and disposal of foreign currency. Hydrocarbon Law No. 26844 of May 1997 eliminated the exclusive rights of the state-owned Petróleos del Perú S.A. to control the secondary recovery of crude oil, refining, and imports and subsequent resale of petroleum and byproducts. The Peruvian laws have attempted to ensure more-favorable minerals and crude oil and gas exploration and production contract terms for investors. Legal procedures to obtain mining rights were made easier by the enactment of complementary legislation Supreme Decree No. 018 of July 9, 1992. The Government relinquished exclusive control over exploration, mining, smelting, and refining of metals and fuel minerals. Individuals and private companies are allowed to hold mining permits in Peru. In the legal framework for investment and taxation, no distinction is made among domestic and foreign investors, corporations, joint ventures, and consortia formed in Peru or abroad. Municipalities and Regional governments in areas where mineral resources (metals and industrial minerals) are exploited will receive 50% of the taxes collected to be invested in education and social programs (health, housing, and others) in conformance with the Canon Minero (Ministry Resolution No. 266-2002-EF/15 of May 1, 2002). The remittance of dividends, depreciation, and royalties abroad has no restrictions. Contracts can be signed by investors, and the Government guarantees the stability of legal commitments and taxes. To increase protection of investors’ interests, Peru signed agreements with the World Bank’s Multilateral Investment Guarantee Agency in April 1991, which was authorized by Legislative Decree No. 25312 and with the Overseas Private Investment Corporation in December 2002, which was authorized by Legislative Decree No. 25809.
The Dirección General de Asuntos Ambientales (DGAA) of the Ministerio de Energía y Minas (MEM) has the responsibility to address environmental problems that result from energy and mining activities and is mandated to implement the laws and regulations of the environmental legal framework, such as Legislative Decree No. 613 of September 1990 (the environmental code) and Supreme Decree No. 016-93-EM of April 28, 1993 (the environmental regulation). The sustainable development model for the mining and energy sectors began in 1993 with regulations and procedures for the gradual reduction of pollution, which include economic development policies and environmental protection. The mining industry must comply by adjusting its ongoing operations to permissible effluent levels and its new operations by using cleaner technologies. The DGAA evaluates and proposes the environmental regulations for the mining and energy sectors, which include the maximum emission levels that are compatible with the internationally accepted limits set by the United Nations and the World Bank, approves environmental impact assessments for new operations and environmental adjustment and management programs for ongoing ones, and administers the national environmental information system. The MEM is authorized to manage environmental affairs in the minerals sector, such as establishing the environmental protection policy and maximum allowable levels for effluents, signing environmental administrative stability agreements, overseeing the impact of operations determining responsibilities, and imposing administrative sanctions. The oil companies, in particular, are under pressure because the number of operations in the Amazon Rain Forest, one of the world’s most sensitive ecosystems, is increasing.
Read more about this topic: Mineral Industry Of Peru
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