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NATIONAL FUND FOR THE FINANCING OF THE
PERUVIAN STATE'S BUSINESS ACTIVITIES
Titto Almora Ayona
Legal Manager
FONAFE
FONAFE: THE EXPERIENCE OF THE PERUVIAN HOLDING
Board Members
Ministry of
Transportation
and
Communications
Ministry of
Housing,
Construction
and Sanitation
Ministry of
Energy
and Mines
Ministry of
Economy
and Finance
President
of the Council
of Ministers
FONAFE
18 electricity
generation and
distribution
companies
2 Oil and
remediation
companies
3 banks and
finance
companies
1 water and
sewer company
6
service
companies
5 infraestructure
and transportation
companies
WHAT DOES FONAFE MEAN?
CONTRIBUTION TO THE PUBLIC TREASURY
6,000
5,000
S/. MM
4,000
3,000
2,000
1,000
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
THE FONAFE CORPORATION
contributed S/. 5,000 MM ( US$ 1 877 MM)
to the Public Treasury in 2010, through the
payment of taxes and direct net transfers.
WHAT DOES FONAFE MEAN?
Evolution of Equity, Operative Income, Assets, and Personnel
of the FONAFE Corporation's companies (2000-2010)
30,000
60,000
25,000
50,000
20,000
40,000
15,000
30,000
10,000
20,000
5,000
10,000
0
0
2000
Equity
2001
2002
2003
Patrimonio
Income
2004
2005
Ingresos
2006
Activos
Assets
2007
Personal
2008
2009
2010
Personnel
Note: As far as Assets and equity are concerned FONAFE is not considered a company.
This includes personnel on payroll, allocation services, outsourcing and interns, except in the case of PETROPERU where
only the personnel on payroll is considered.
Activos
A S S E T S
Patrimonio, Ingresos, Personal
E Q U I T Y - I N C O M E - P E R S O N N E L
(In millions of Nuevos Soles and in Number of People)
WHAT DOES FONAFE MEAN?
Evolution of the Return on Assets (ROA), of the Return on Equity (ROE) and the Operational Income per
worker of the FONAFE Corporation companies (2000-2010)
400
6.00
300
4.00
200
2.00
100
0.00
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-2.00
-100
Operating income per worker
-4.00
-200
ROA
ROE
Operating
incomepor
perTrabajador
worker
Ingreso
Operativo
-6.00
Note: In 2002 there were losses as a consequence to the sale of ETECEN's assets to the Ministry of Energy and Mines, a simbolic
value, before it was turned over as a concession to the Red de Energia del Peru S.A. (REP). A concession contract was
signed on September 05, 2002.
-300
WO R K E R
8.00
T H O U S A N Miles
D S
O F US$
U /S Trabajador
D $
P E R
de
P E R Porcentaje
C E N T A G E
(In percentage and in Thousands of USD$ per worker)
STRATEGY
PROCEDURES
TECHNOLOGICAL
RESOURCES
HUMAN RESOURCES
WE HAVE MADE PROGRESS...
SERVICE
WE HAVE MADE PROGRESS...
STRATEGY
Guidelines for
Strategic Planning
Scope of Corporate
Processes
Good Corporate
Governance
The objective is to align the companies' Strategic Plans with FONAFE'S and
with the State's strategies.
Besides, having elaborate Strategic Plans presented in a homogenous manner
to facilitate transparency.
WE HAVE MADE PROGRESS...
STRATEGY
Guidelines for
Strategic Planning
Operations
Management
Companie
s Distrib. I
Scope of
Corporate
Processes
Management
Corporate
TIC
Corporate
Management
of RRHH
Good Corporate
Governance
Corporate
Purchasing
Management
Investment
Project Office
Companies
Distrib. II
Power
Companies
Companies
NonElectrical
Infrastructure
Diverse
Companies
Financial
Companies
WE HAVE MADE PROGRESS...
STRATEGY
Guidelines for
Strategic Planning
Scope of
Corporate
Processes
Good Corporate
Governance
Framework Code of Good
Corporate Governance
of State Enterprises
Under the scope of
FONAFE - 2005
Codes of
Corporate Governance
for different
state companies
(since 2005)
STRATEGY
PROCEDURES
TECHNOLOGICAL RESOURCES
HUMAN RESOURCES
WE HAVE MADE PROGRESS...
SERVICE
WE HAVE MADE PROGRESS...
HUMAN RESOURCES
a)
Director Profile
Manager Head
Hunter
b)
c)
d)
The Boards of Directors are made up of 5 Directors, 4 who are appointed by the
Minister of the Sector the Company is affiliated with and 1 who is appointed by the
Minister of Economy
FONAFE evaluates that the appointments comply with the General Director's Profile.
FONAFE's Board of Directors has to approve the appointment.
The General Shareholder's Meeting of the Company has to approve the appointment
of the Director.
General Profile
Professional Experience
Experience as a Director (*)
Minimum 10 years
Minimum 05 years
(*) In companies with an equity of no less than S/. 30 MM (US$ 12 MM)
Education:
University, lowest academic level either a Bachelor's Degree or a Master's
Desired: at least 5 years experience in management positions or as the head of a unit.
Desired: specialization in financial or managerial institutions.
Besides, the rules in effect, the incorporation of at least one independent Director is
considered for each Board of Directors, said procedure is in the process of being
executed and some companies consider the incorporation of more than one.
WE HAVE MADE PROGRESS...
HUMAN RESOURCES
Director Profile
The “Applicable Guidelines for Managers of the Companies under FONAFE”, seek to have
these positions filled by professionals who comply with the profile required to be able to
perform the duties of the position, it is also important that the Board of Directors has several
candidates to choose from.
Year 2006:
Manager Head Hunter
Applicable guidelines for the
appointment of Managers of the
State Owned Companies under
FONAFE's scope.
80
Manager and Equivalent Position Selection - Head Hunter
Number of Processes Summoned
(2008 - 2011 period)
Year 2009:
Order applicable to the selection
of managers and equivalent
positions in the Companies
under FONAFE's scope.
(Appointment of the GSM in
case the Board of Directors
doesn't do it within the
established
time-frame).
Additionally,
and
internal
manager
rotation
was
incorporated at the same level
with validation from the Head
Hunter).
63
60
49
40
32
21
20
12
0
2007
2008
2009
2010
May-11
STRATEGY
PROCEDURES
TECHNOLOGICAL RESOURCES
HUMAN RESOURCES
WE HAVE MADE PROGRESS...
SERVICE
WE HAVE MADE PROGRESS...
TECHNOLOGICAL
RESOURCES
History
Video Conference
Network
Electronic Document
Exchange System
The great geographical distances made it complicated and tiresome to gather the managers and
professionals of the related companies, so that they could share better practices or design and
implement ad-hoc solutions to common problems that they faced.
Transportation and travel expenses and increase drastically. It would become very expensive to
control if the trips were necessary and the internal auditor oftent penalized the workers.
Proposed Solution
Implement a video conference network in all the companies under FONAFE's scope, that will
allow them to meet from one point to another or even five different positions at a time.
Shared Data Center
Results
•
•
•
•
Increase inter-company meetings and ordinary sessions on "corporate networks"
Reduction in transportation and travel expenses
A better use of the workers time in their companies.
Reduction of reprimands to workers and comp time in expense control
WE HAVE MADE PROGRESS...
TECHNOLOGICAL
RESOURCES
History
Video Conference
Network
Electronic Document
Exchange System
The documents sent from FONAFE to the Companies and viceversa, could take days to reach
their destination and in many cases there was not the certainty that the document had been
received by the apropriate person.
This caused a delay in gathering information in order to make decisions, as well as the
communication of FONAFE's dispositions or guidelines.
Proposed Solution
Implement a data system that allows instant communication between FONAFE's companies, with
the legal value and adequate security levels (digital signatures )
Shared Data Center
Results
•
•
•
•
Speed in communication, identifying if the document has been received (Online)
Reduction in courier and printing expenses
Fluidity in the communication between FONAFE's companies
Elimination of lost or misplaced documents.
WE HAVE MADE PROGRESS...
TECHNOLOGICAL
RESOURCES
Management and
Operation
Physical infrastructure
Applications
Video Conference
Network
Communications
Corporate
Chat
Processing
Electronic Document
Exchange System
Storage
Mail
Shared Data Center
Active Directory and
DNS
Remote Access
Internet Access
• Contract with IBM: US$. 9.7
MM
• 5 year term
• 9 companies involved
STRATEGY
PROCEDURES
TECHNOLOGICAL RESOURCES
HUMAN RESOURCES
WE HAVE MADE PROGRESS...
SERVICE
WE HAVE MADE PROGRESS...
PROCEDURES

Corporate
Purchasing
The State Owned Companies are grouped through an agreement with
FONAFE, to acquire, or contract goods and/or services in a joint manner.
Mandating
Company 1
The mandating
company performs:
Mandating
Company 1
•The preparation
Stock Market
Listing
•The selection Process
Mandating
Company 2
Mandating
Company 2
Mandating
Company
Mandating
Company 3
Mandating
Company 3
The
execution
of the
contract
with the
selected
provider
WE HAVE MADE PROGRESS...
PROCEDURES
COMPANIES THAT ARE CURRENTLY LISTING SHARES
Corporate
Purchasing
Stock Market Listing
N
COMPANY
LIST
VALUE
1
SEAL
YES
Shares
% LISTED ON
THE BVL
22.87%
2
SAN GABAN S.A.
YES
Shares
10%
2003
3
HIDRANDINA S.A.
YES
Shares
4.81%
1998
4
ELECTROPERU S.A.
YES
Shares
10%
2006
5
ELECTRO SUR ESTE S.A.A.
YES
Shares
2.80%
2003
6
ELECTROPUNO S.A.A.
YES
Shares
7.88%
2003
7
SEDAPAL S.A.
YES
Shares
10%
2004
8
ELECTRO SUR S.A.
YES
Shares
10%
2011
COMPANIES THAT ARE
CURRENTLY
LIST ING
BONDS
N°
COMPANY
LIST
VALUE
1
COFIDE
YES
Bonds
% LISTED ON
THE BVL
--
SINCE
2003
SINCE
1999
Pending Assignments...
PROCESSES
GOOD BUSINESS PRACTICES
• Incorporate independent
Directors (director head
hunter).
• Market control (inclusion of
private market).
INTERNAL CONTROL SYSTEM
• COSO implementation
MANAGEMENT AGREEMENTS
• Relaunching
COSO
PENDING ASSIGNMENT...
SERVICES
• Reduction of un-billed
Water, and Coverage
Increase.
• Increase of power
generation
• Increase the power
distribution coverage
without increasing power
losses.
• Increase banking at the
national level.
"IT IS ALL IN THE PHILOSOPHY OF
GENERATING VALUE FOR THE
SHAREHOLDER, THE PERUVIAN STATE"
THANKS