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UPDATE 3-Odebrecht to sell Peru pipeline to Brookfield -finance minister

Published 2016-12-21, 01:22 p/m
UPDATE 3-Odebrecht to sell Peru pipeline to Brookfield -finance minister
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(Adds that Brookfield, Odebrecht and Techint declined to comment)

By Marco Aquino

LIMA, Dec 21 (Reuters) - Brazilian construction conglomerate Odebrecht SA ODBES.UL is in advanced talks on selling its majority stake in a $5 billion natural gas pipeline project in Peru to Canada's Brookfield Asset Management Inc BAMa.TO , Peru's Finance Minister Alfredo Thorne said in a televised interview.

The two companies and the government of Peruvian President Pedro Pablo Kuczynski struck a deal Friday, Thorne said.

"We're about to close," Thorne told local journalist Jaime de Althaus in an interview late on Tuesday. "I think we'll be signing before the end of the year."

Techint Group would also join the project as a junior partner and would be tasked with construction, Thorne added.

Brookfield, Odebrecht and Techint declined to comment. Thorne did not respond to requests for comment.

Odebrecht is at the center of Brazil's biggest-ever graft scandal. about liability for corruption have snagged financing for the pipeline and Odebrecht's attempt to sell its 55 percent stake in the project as required by lenders.

Thorne said Brookfield agreed to keep an anti-corruption clause in the pipeline contract, a condition the government had been firm on but which had been a deal breaker for U.S.-based Sempra Energy (NYSE:SRE) SRE.N when it nearly bought Odebrecht's stake last month. said the clause would allow Peru to seize the project if Odebrecht were found to have broken any laws. The government said it would apply to corruption going forward and is part of all public work contracts.

As the project stalled, the government considered rescinding the contract to hold a new auction. But Odebrecht's junior partner, Peruvian construction group Grana y Montero GRAM.N GRA.LM , said the government would have to pay more than $1 billion in compensation for investments made if it did so. shares jumped by more than 10 percent on Wednesday. said the government would likely look for a company to build smaller pipelines that would link the main pipeline to cities in southern Peru.

The pipeline is expected to transport natural gas from southern Peru to the coast where it will fuel power plants and a future petrochemical complex.

An Odebrecht-led consortium won the pipeline contract in 2014 during the government of former president Ollanta Humala after its sole competitor was disqualified.

Peruvian prosecutors have accused Humala taking illicit funds from Odebrecht but have not yet pressed charges. energy company Enagas SA ENAG.MC controls a 25 percent in the project and Grana holds 20 percent.

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