Peru Cancels Pipeline Contract With Odebrecht

Wall Street Journal WSJ-01LIMA—Peru will terminate a contract with a consortium led by Odebrecht SA to build a $7-billion natural-gas pipeline, a government minister said, the latest blow to the Brazilian construction giant amid an expanding corruption scandal into how the company secured lucrative deals.

Mines and Energy Minister Gonzalo Tamayo said on Monday the Southern Peruvian Gas Pipeline consortium, which is majority-owned by Odebrecht, failed to meet Monday’s deadline to secure financing and would be officially told on Tuesday that the contract will be rescinded.

Mr. Tamayo said the consortium would also be assessed a $262-million penalty for not completing the contract to build the 700-mile-long pipeline to transport cheap natural gas from the Amazon to towns across the southern highlands and on to the Pacific. Odebrecht has a 55% stake in the project. Spain’s Enagas has 25%, and Peru’s Graña y Montero has 20%. …

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During the last several decades, the United States has invested billions of dollars in trying to help the governments of Latin America and the Caribbean deliver better lives for their citizens. This has meant helping them increase internal security by combating the illicit growing and trafficking in narcotics and the activities of terrorist groups, as well as helping them to shore up their democratic and free market institutions.

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