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Interview

with Fernando Levano Mendoza, General Manager, H&O Ingenieros

13.05.2011 / Energyboardroom

How do you assess Peru’s transformation to become Latin America’s fastest growing economy?

It is very pleasing to see this finally happening in my country, because my generation has waited decades to see the kind of economic growth and development that we are currently experiencing. The level of infrastructure that is being constructed today, in the energy sector as well as others, is unprecedented for us Peruvians and it is a clear sign of the political and economic improvements that can only continue to develop further. We are looking forward to see the results of the upcoming presidential elections to make sure that the next administration will continue with the policies that have brought us here today.

Considering this rapid growth and the many changes that are occurring in the energy industry of Peru, how is H&O Ingenieros positioning itself to capitalize on the opportunities?

We started out as a company that provided basic engineering services specialized in waterways. My initial goal in creating H&O Ingenieros was simply to provide a decent living for my family and I never thought of expanding to become a large operation. After observing the growth of the country and the industry I could not pass up so many opportunities and began establishing strategic partnerships with international companies. I recently traveled to Spain where I signed agreements with companies in a number of specializations, such as submarine geophysics, hydraulics and energy. I also have partners in Chile, Ecuador and the US that provide our company with support and expertise so that we can offer the latest technologies to our clients. Establishing these partnerships is a part of a larger restructuring of the company to solidify our operations and professionalize our services. For in example, in the past I served as the commercial, financial and operational director all in one, but now I have hired competent people to fulfill all of those roles so that we can adequately serve our clients and ensure the our operations run smoothly. As a matter of fact, tomorrow the entire staff of the company will begin a two and a half month seminar so that everyone is fully trained on the issues that are essential to the company.

What do you consider to be the most important project that H&O has accomplished and the one that you are most proud of?

The project I am most proud of is a hydraulic study that I conducted in the rivers of the Amazon. I worked in the field for three years and conducted the entire study out there – it was nothing like the studies done from the comfort of your computer. This project is personally special for me because I consider freshwater hydraulics to be my specialty, and since then H&O has been responsible for the vast majority of hydraulic projects conducted in Peru. The study covered 1,200 km of the Ucayali River to determine its navigability so that boats could transit on it. The latest of this kind of projects we completed is called “Hydroways” and includes the Ucayali, Marañon, Huallaga and Amazon rivers. Its aim is to determine the viability of establishing a commercial route between Peru and Brazil through these rivers and covers a total area of 3,500 km. The ultimate aim would be to join the Pacific and Atlantic Oceans by establishing reliable transit routes on these rivers. If this were to be achieved it would be extremely important for the commercial ties of the region. Similar studies were also conducted for Pluspetrol during the development of the Camisea project, because the rivers were the only means to transport all of the necessary materials to set up their operations in that area.

Given your extensive offering what are the most profitable services for H&O Ingenieros?

The projects that generate most revenues for the company are those for submarine geophysics. Due to the high technological requirements that these projects demand they are very well-paid and are relatively short in duration. Our navigability studies are mostly contracted by the government that does not pay as much as the private sector. The State also takes longer to pay us, and given that navigability studies usually take months, this can be a challenge for our cash flow. This is something that was taken into consideration when we decided to restructure the company, because our aim now is to take on more private clients and to expand our business serving the hydrocarbon industry directly.

Most of companies we have met have spoken about the geographic and environmental challenges of operating in Peru. What specific solutions and/or technologies do you offer companies to address such challenges?

I am not sure that I agree with them in thinking that Peru’s greatest challenge is its geography. At H&O we are used to operating in the most remote locations and extreme environments. We have 15 years of experience doing what we do in Peru so we know that you have to plan according to the climate and location of a project. These challenges can easily be overcome with the right equipment and technologies. I am not saying that it is easy to operate in such locations, but it can definitely be done if things are planned ahead of time. I would say that the greatest challenge for companies in Peru is to have the access to the most modern technologies and the adequate human capital to compete with cutting-edge global standards. This situation needs to be addressed with greater education and with financial incentives that assist small and medium companies such as ours.

What would you say is H&O’s competitive advantage versus global companies that offer similar kinds of services and have worldwide experience?

Our advantage is that we are Peruvian and we know how to operate in any part of the country. As we were just discussing, we are used to the geography and climate of the different regions and we also know how to work with local authorities to make things run smoother. H&O offers the same quality of services and uses the same technologies as any international company. This hasn’t been easy for us to accomplish because Peruvian universities do not offer courses in our field. Nonetheless we have managed to acquire technology and train our people through the international partnerships that I had mentioned earlier. These have been essential for us to keep up with global standards and to offer the latest technologies to our clients.

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