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International Finance Corporation World Bank
PROJECT STATUS: Active
 
PARTNER/CLIENT NAME: Peru LNG (Hunt Oil Company, Repsol YPF, SK Energy Co., Ltd, Marubeni Corporation)
 
COUNTRY/ REGION:  Peru
 
COMMUNITY DEVELOPMENT FOCUS: Capacity Building, Indigenous Peoples, Local Economic Development and Supply Chains, Partnerships and Stakeholder Engagement, Revenue Management, Monitoring & Evaluation.
 
SECTOR: Oil & Gas
 
BACKGROUND:

The Peru LNG project is the largest direct foreign investment in Peru’s history ($4 billion). Peru LNG will support economic growth in some of Peru’s poorest regions, both through its contribution to government revenues and its community development programs near the plant and pipeline through:

  • Business Linkages Program, which will help stimulate the local economy by giving small and medium enterprises opportunities to provide goods and services to Peru LNG.
  • Municipal Royalty Investment Program, a pilot program that will help increase the ability of two of Peru’s poorest municipalities to manage, plan, and allocate revenues they receive, leading to a more efficient investment of royalties.
  •  Community Participatory Monitoring, which will give project affected people an opportunity to evaluate the company’s environmental and social performance.
The Community Participatory Monitoring project is intended to mitigate risk by engaging stakeholders in the monitoring of Peru LNG’s environmental and social performance. Stakeholders include community members, regulatory agencies and independent agencies. In addition, the provincial municipalities of Huamanga and La Mar in Ayacucho and Huaytara in Huancavelica have been selected for the Enhancing Royatlies Investment program. In this program, capacity building within provincial municipalities is implemented in the direct area of influence of the pieline to form multi-year plans to obtain revenues from royalty funds for which they are eligible and to invest these revenues in municipal projects. The Business Linkages program is designed to mitigate social risk and enhance local devleopment in the area of the LNG plant. This program enables small to medium size enterprises (“SMEs”) to be incorporated into the supply chain of PLNG and other medium to large businesses.
 
PROJECT OBJECTIVES AND DESCRIPTIONS:
 
Community Participatory Monitoring:
Develop a mechanism and build the capacity of project affected communities for their participation in the monitoring of the Company’s social and environmental performance during the construction phase (until 2010) of the Project.
 

Description:

  • An assessment will allow the Company to evaluate the consultation process that has taken place to date, identify the needs and concerns of local stakeholders in order to design a third party monitoring system that complements or fortifies, rather than duplicate, existing or planned monitoring programs.
  • An international expert hired by the IFC will aid in the design of the CPMP and provide advice on international best practice.

Enhancing Royalties Investment:

Improve municipal investment in three provincial municipalities in the area of influence of the PERU LNG pipeline over a 2 year period. This is to be done by improving local governments’ investment management capacity and establishing voice mechanisms for civil society to monitor public investment.
 

Description:

  • Push for improvements from within municipalities, in order to enhance municipality’s capabilities to manage local investment.
  • Help civil society organizations get organized to undertake a systematic monitoring of municipal investment, and promote both local public debate and local government-citizen dialogue, aimed at “pulling” municipal governments to improve their investment performance.
 
Business Linkages:
Create economic opportunities for 100 SMEs over a 2-year period resulting in aggregate increases in revenues, contracts, and number of jobs created.
 

Description:

  • Through supplier development, support the development of local businesses as potential suppliers and providers of goods and services to the PLNG, through training and mentoring that will allow the SME’s to meet PLNG’s quality, safety and delivery standards.
  • Through institutional capacity building, develop and improve the capacity of local institutions to prove long-term business support, training and other services to the local business community.
  •  Engage with other industry partners and purchasers of goods and services in the region to broaden the market opportunity for local businesses

Results:

Lima, PERU - IFC’s Business Linkages Program in Peru (ForPyme) promotes local economic development by building the capacity of SMEs to provide goods and services to Peru LNG. The program was awarded a prize by CAREC (Comite de Administracion de los Recursos para Capacitacion ), for the best social responsibility project on September 21, 2010. CAREC, whose mission is to promote the transfer of technology and the training of personnel of the oil industry, extends this award every two years. 

 

Click here to view an interview with Gonzalo Flores (IFC) and Natalia Barantseva (GBF) on "Rumbo Economico", Business TV Program in Peru.
 
 
 

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Guidance Note on Designing Participatory Monitoring Programs
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This guide highlight good practice in designing participatory monitoring programs as a form of socio-environmental management. The concepts and examples presented here are drawn from the many experiences and cases of the extractive industries. Best international practice has served as a guiding principle to organize the information and to incorporate the lessons learned from these experiences.