Big Projects, Small Business - Making the Missing Link: Peru LNG
Large oil and gas projects, sponsored by foreign multinationals, selling into global markets—can they be good for the little guy in local economies? In Peru, the answer is clear.
The $3.8 billion Peru LNG project is Peru’s largest-ever foreign direct investment. Sponsored by Hunt Oil Co. of the U.S. with partners from Spain, South Korea, and Japan, it opened in 2010 as Latin America’s first liquefied natural gas project, shipping from a terminal 170 km south of Lima. Financed by IFC, it contributes heavily to national tax revenues. Yet its highly automated operations created only 200 permanent jobs, and its demand for locally sourced products is modest.
How else could this major wealth producer make a positive contribution to local communities?
This is a question Peru LNG’s socially responsible sponsors brought to IFC in 2009.
The response: creation of ForPYME, a two-year, $1.3 million program to increase business opportunities for SMEs (PYMEs in Spanish) in the nearby towns of Chincha and Cañete.
Heavily involved in this field for a decade, IFC had much global expertise to share, and a network of proven partners like training specialists Swisscontact and Recursos S.A.C., which diagnosed local SMEs’ business needs and then offered affordable skill-building courses they never could have taken otherwise. A trade fair then connected participants with large corporations, generating $2 million in new sales.
“ForPYME has helped change our business perspective,” says Sergio Kamo of Chincha wood products company Industrias Rendas. “I’ve learned to delegate, something I was particularly reluctant to do before. This has given me more time for other things, and led to new business opportunities that in the past would have been impossible for me to find due to lack of time.”
Industrias Rendas is one of 49 local SMEs that have experienced at least 20 percent revenue growth under the program, one whose basic model IFC applies with many other oil, gas, and mining clients around the world.