November 29, 2018 / 8:33 PM / 6 months ago

UPDATE 2-Odebrecht to sell Peru hydroelectric plant to Chinese consortium

(Adds details on arrangement of deal, establishment of trust, context from Justice Ministry)

By Marco Aquino

LIMA, Nov 29 (Reuters) - A state-owned Chinese consortium has struck a deal to buy Peru’s Chaglla hydroelectric plant from scandal-plagued Brazilian builder Odebrecht SA for at least $618 million, Peru’s Justice Ministry said on Thursday.

Justice Minister Vicente Zeballos told reporters that Odebrecht would turn over half the sale price agreed upon with the Chinese consortium, led by Three Gorges Corp, to cover reparations in a long-running corruption case.

The Chinese consortium would also agree to pay off Odebrecht’s debt to the firms that originally financed the construction of the hydroelectric plant, bringing the total investment to $1.39 billion, the minister’s spokeswoman told Reuters.

Zeballos said Odebrecht would be required to deposit half the $618 million it nets from the sale into a “trust overseen by Peru’s Banco de la Nacion to be used exclusively to pay suppliers and debt.”

The minister added that negotiations were still underway on the specifics of the deal, including the sale price.

Odebrecht declined to comment on the matter.

The Brazilian builder has been at the center of Latin America’s biggest graft scandal after admitting to paying bribes from Peru to Panama. It is selling assets to shrink its debt as it faces billions in fines and bans on bidding for government contracts throughout the region.

After Brazil, Peru is the country where the Odebrecht scandal has been most disruptive. Peru’s four most recent presidents are under investigation in connection with alleged bribes paid by Odebrecht.

The sale of the 456-megawatt hydropower facility, Peru’s third largest, must still be approved by the Economy Ministry and the Energy and Mining Ministry, as well as the state-run power company Electroperu.

The deal is China Three Gorges’ first venture in Peru as the presence of Chinese companies grows in Latin America.

The Chaglla hydro project is a critical supply of power for Peru’s mining industry in the country´s northern Andean mountain region.

Reporting by Marco Aquino writing by Dave Sherwood Editing by Leslie Adler and Lisa Shumaker

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