Despite the completion of a tender process for the sale of two Peruvian utilities in the middle of June, and the announcement of the winning bidder, the Peruvian government will not now complete the sale until a court ruling about its validity.

The companies in question are the two southern Peruvian utilities Egasa and Egesur, with a minimum bid price set by the government of $156 million. Bidders included the US companies NRG Energy Inc and Public Service Enterprise Group, Belgian company Tractebel and the Norwegian state utility Statkraft. When the result of the tender was announced, Tractebel was the winner. However public pressure, which included a strike in the region where the utilities operate, has forced the government to backtrack. In the face of widespread criticism it will now turn the matter over to the courts.

The sell-off has become a focal point for opposition to privatisation. The government was hoping to raise up to $800 million this year to help offset the country’s budget deficit. However the experience of the 1990s when the proceeds of up to $9 billion from privatisations were squandered has left many Peruvians suspicious.

In southern Peru, where the two companies are based, it is feared that tariffs will be raised and workers laid off. Although the president, Alejandro Toledo, has promised to re-invest profits into the fight against poverty, locals are sceptical, claiming that he had promised during last year’s election not to sell the two companies.

Two other electricity sector companies were also sold in June with less apparent resistance. At the beginning of the month the government set a minimum bid price of $229.6 million for Etecen, whichdistributes electricity from the Mantaro hydropower plant to northern Peru, and Etesur, which distributes energy to the south. The stake was sold to Interconexion Electrica SA, the Colombian state utility, which was eventually the only bidder in the sale.