OECD - Driving Performance at Peru’s Energy and Mining Regulator

Economic regulators should play an important role as impartial referees to guarantee the predictability and certainty of regulatory regimes crucial features for attracting investment. Their job is inherently a complex one, requiring neutral engagement with a variety of actors, including government, citizens and consumers, and operators. The model of independent economic regulation, based on strong technical capacity, transparency, autonomy and constructive engagement with stakeholders, can help regulators tackle this complex landscape. Moreover, independent regulators can provide certainty to markets and society during periods of external instability. However, regulators need to be correctly equipped to carry out these fundamental tasks and stay abreast of market evolutions.

To support regulators as they face these challenges, the OECD has developed a framework to assess and strengthen their organisational performance and governance structures. The framework analyses regulators internal and external governance, including their organisational structures, behaviour, accountability, business processes, reporting and performance management, as well as role clarity, relationships, distribution of powers and responsibilities with other government and non-government stakeholders.

This report applies this OECD framework to Osinergmin, the Peruvian regulator responsible for energy markets and large and medium mines. The review finds that Osinergmin has achieved a strong reputation as an autonomous and technically competent regulator. The regulator has evolved by absorbing new functions and changing its competencies over the last 20 years.

While this review considers that Osinergmin has adapted with a relatively high degree of success to meet its changing mandate since 1997, it is also facing a number of challenges. Most importantly, it should build on its technical competency and strive to become a more proactive organisation with clearer objectives for the regulated sectors and a stable institutional role.

The report provides recommendations to help Osinergmin face this key challenge. These recommendations are intended to complement the Osinergmins ongoing efforts to improve its governance processes in line with best practices. The review underlines, amongst others, the importance of co-ordinating with other agencies more formally and regularly, better communicating the impacts of austerity and fiscal measures, and building stronger consultation practices to strengthen stakeholder engagement.

These actions, among others put forward in this report, could help Osinergmin build on its technical work and reputation to become an example of institutional maturity within the Peruvian public administration.

Finally, the review, carried out in parallel with that of the Perus telecommunications regulator, OSIPTEL, recommends that Perus four economic regulators work together more effectively to share best practices and address common challenges.

This report is part of the OECD work programme on the governance of regulators and regulatory policy, led by the OECD Network of Economic Regulators and the OECD Regulatory Policy Committee with the support of the Regulatory Policy Division of the OECD Directorate of Public Governance. The Directorates mission is to help government at all levels design and implement strategic, evidence-based and innovative policies that support sustainable economic and social development.