Lobby increasing in Peru to widen energy sector’s economic impact

Peruvian lawmakers have drafted an initiative to amend the canon law in a bid to fine-tune the distribution of payments from hydroelectric operations.

In a bill introduced to congress, socialist legislators seek to define the percentages and recipients of the 50% paid by companies on income from the use of water to generate power.

The legislators further highlight that although the current canon law benefits areas in which there is a power plant, it excludes areas that are the source of the water for the generation, such as basin heads.

The bill’s authors point to canon transfers between 2020 and June 2024 to the provinces of Junín and Tayacaja from the operation of the country’s principal hydroelectric complex, Mantaro.

Junín, home to the source of water for Mantaro, received 487,500 soles (US$130,268), while Tayacaja, where the plant is located, received 162 million soles, according to government numbers cited by the lawmakers.

The proposal would distribute 35% of canon payments to municipalities in whose territory the head of the basin is located, 45% to municipalities where hydroelectric plants are located, and 20% to communities in basin head influence areas.

“The modification of the law emphasizes that the receiving provincial and district municipalities will allocate the resources of the hydro energy canon to the conservation, protection and monitoring of water sources and the ecosystems of the basin headwaters, glaciers, moors, wetlands, springs, as well as water planting and harvesting, afforestation and reforestation programs in order to guarantee the permanent flow of the resource, as well as an environmental equilibrium,” the bill reads.

“In the same way, rural communities and population centers that live in the surroundings of the head of the basin, and that are frequently affected by landslides and floods that destroy their farmlands and homes due to intense rains, are established as beneficiaries; and, at other times of the year, due to frosts and droughts that destroy their crops, exacerbating their poverty situation.”

The legislative proposal is available in the Documents box in the top right corner.

The use of canon payments by regional and local governments to pay for items other than social development projects, for example, has come under scrutiny and led to growing demands by communities to ensure that proceeds are used to benefit areas where energy and mining activity takes place.

In recent weeks, a similar bill was introduced to congress to establish a canon from solar power generation.

Read Legislative proposal seeks greater benefits from Peru solar plants