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Peru’s government is planning to replicate the model of the Yuncan hydroelectric project by allowing private companies to participate in advanced stages of generation projects under a scheme to benefit regional infrastructure projects, energy and mines minister Jaime Quijandrí­a claims.

“We are thinking about a scheme in which we bring in private companies to take concessions and help finance new stages of existing projects,” Quijandrí­a says.

The scheme does not involve directly selling shares in energy assets, but “rather incorporating a partner to make the investment and recover their investment through a 30-year concession, which is the Yuncan model,” he adds.

Projects that could be developed under this scheme include the second stage of the 90MW Machu Picchu hydroelectric plant, and additional expansions of the San Gaban and Mantaro hydroelectric projects, Quijandrí­a says.

Peru’s government signed a 30-year concession for the 130MW Yuncan hydroelectric project with Enersur, the local subsidiary of Belgian energy company Tractebel, in February.

Under the agreement, Enersur will help cover the remaining construction costs of the project, which the state government cannot afford, and pay some of the money to Pasco department for infrastructure projects. The company will then recover its investment over the 30-year period.

The government’s recent attempts to privatise state-owned generators, such as Egasa and Egesur in Arequipa department, have run aground in the face of local opposition. However, the Yuncan model is a middle way that is acceptable to the state government, companies and the regions, Quijandrí­a says.

“The Yuncan model has been successful and we think we can study it for a series of state-owned generators,” the minister adds.

“The idea is first, for the regions to participate in these projects, and second to sign contracts with the companies so that part of the revenue goes to a trust fund to finance regional infrastructure projects,” he says.

Private companies could obtain financing from abroad or from local pension funds (AFPs), which are participating in financing the Yuncan project and are increasingly interested in participating in local energy projects, Quijandrí­a says.

“Where [companies] get their financing is their problem. If they do it with AFPs they’d be repeating the Yuncan model but if they have their own resources from outside there’s no problem,” he says.