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Peru Suspends Sale of State Companies

June 20, 2002

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LIMA, Peru (AP) _ In the face of six days of violent protests in several southern cities, Peruvian government officials said Wednesday they would suspend the sale of two state-owned electricity companies.

Street celebrations broke out in the city of Arequipa in response to the announcement there by Vice President Raul Diez Canseco, who also read an open letter of apology from President Alejandro Toledo.

Earlier Wednesday, Toledo canceled a trip later this week to the United States and Nicaragua because of the unrest. There was no word late Wednesday on whether he was reconsidering.

After nearly a day of negotiations with mayors and civic groups, the government agreed to let Peru’s higher courts rule on the legality of selling the state companies.

``Forty eight hours after this announcement, and the reestablishment of public order, the government will lift the state of emergency,″ Diez Canseco said.

Arequipa Mayor Juan Manuel Guillen, who participated in the negotiations in Arequipa, Peru’s second largest city, said at a news conference that he was pleased with the agreement. A group of regional mayors said in a statement, however, that privatizations should be approved by referendum.

At least one person has been killed and about 140 injured since the protests first broke out. The government on Sunday imposed a 30-day period of martial law on Arequipa and five other cities in southern Peru.

Protests began after the government announced an electricity-generating company in Arequipa and another in Tacna would be sold to Tractebel, a Belgian company, for $167.4 million.

Tractebel’s representative in Peru, Klaus Huys, told Radioprogramas the Belgian company agreed with the decision.

Protesters say Toledo failed to consult local leaders about the sale, reneged on a campaign promise not to sell off the electricity companies and ignored a court ruling against the auction.

Protesters fear the sale of the electric companies will lead to job cuts and higher electricity tariffs with little reinvestment in the region.

On Wednesday, police in Moquegua fired tear gas into marching demonstrators to break protests, authorities said. Protesters blocked the Pan-American Highway with rocks and burning tires, forcing passengers to abandon buses.

In Ilo, the site of Peru’s leading copper production plant, demonstrators blocked a railway transporting ore from a nearby mine to the smelter, Radioprogramas reported.

Roadblocks in Puno stranded dozens of tourists at the Bolivian border while demonstrators marched in Cusco, local media reported.

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