Peru: A Pro-Market Presidency Without a Pro-Market Majority

What happened: Keiko Fujimori won Peru's presidency on her fourth attempt, edging leftist Roberto Sánchez by roughly 50,000 votes (50.1% to 49.8%).

Why it matters: Fujimori's victory removes the single biggest risk that has haunted Peruvian progress for a decade, another presidential removal by Congress, but leaves energy vulnerability and the southern protest risk, which will determine whether political stability actually translates into investment returns.

What happens next: Expect fast wins like deregulation, state-owned oil company asset sales and gas distribution approvals, but silence on structural problems — nearly all of Peru's gas will keep moving through a single pipeline, with no near-term funded solution.

The story of this Peruvian electoral cycle was unusual: After Pedro Castillo’s calamitous presidency, the right should have won by a landslide. Yet Keiko Fujimori got only 11% of the vote in the first round, meaning her government will have no honeymoon.

She will need to gain legitimacy after such a narrow victory. Fortunately for Fujimori, her party, Fuerza Popular, won enough seats in the restored Senate to block impeachment. However, some of her challenges are beyond the political realm, such as the likely onset of a strong El Niño, which will bring both flooding and drought.

Fujimori is Peru's tenth president in a decade and the first since Ollanta Humala in 2011 whose own party enters as the largest force in Congress. She also carries the thinnest mandate in modern Peruvian history.

Indeed, her runoff lead materialized only when overseas ballots — counted last and heavily in her favor — reversed Sánchez's early advantage. Her rival has called the election result fraudulent, announced a “movement of popular resistance” and filed challenges to block the 28 July proclamation despite international observers reporting no significant irregularities. He has also called for social movements on that day during the transition of power. Ironically, in 2021, Fujimori also cried fraud after losing by 44,000 votes; now she needs the institutions she attacked to certify a 50,000 vote win.

For investors, Sánchez's stronghold — the rural interior, above all the south — is where the biggest copper mines and the Camisea gas corridor sit, and where the March gas crisis hit hardest. A government that this region considers illegitimate increases both the likelihood and the duration of road blockades targeting assets.

The Congressional Shield and Its Limits

The real prize is Congress. The final results give Fuerza Popular 22 out of 60 Senate seats and 41 out of 130 in the Chamber of Deputies, the largest force in both, but with Sánchez's party second in each. Removing a president runs through the Senate, where her bloc alone can block it. After a decade of routine presidential removals, that defense is her most valuable asset for stability.

There are two caveats:

1. The shield protects her from Congress, not from the street: In 2020, Manuel Merino had congressional backing and lasted five days once protests worsened.
2. Fujimori has no majority, probably even with allies. Adding right-wing Rafael López Aliaga's party, Renovación Popular, gives her exactly 30 of 60 senators, one short of control, and 56 of 130 deputies. That alliance is no guarantee, either, after López Aliaga spent April demanding that the first round be annulled. Every vote will need centrist partners, and every reform will have a price. One rule change helps: cabinets no longer need a congressional confidence vote, a mechanism Fujimori weaponized in the past.

Energy: Expect Distribution With No Backbone

Fujimori's energy platform is more specific than most rivals', but it will likely focus more on distribution than security: Petroperu slims down to refining and fuel distribution, it keeps selling non-strategic assets, and hands the Norperuano oil pipeline to a specialized operator, restructuring without the word “privatization.” On gas, she will probably back Cálidda's concession extension into central and southern regions, a pipeline extension toward the south coast and small gas-fired plants in unelectrified regions.

What the plan lacks is a funded route to completing the Gasoducto Sur, now rebranded SITGAS. The state's investment agency does not expect to award it before late 2028, so it cannot be finished in her term. The vulnerability exposed on 1 March ensures that connecting more regions to the same single pipe will make the next rupture more painful, not less. Peru is expanding its exposure faster than its resilience.

The backdrop is relevant, too: Hydrocarbons output fell more than 15% year-on-year in Q1, and the central bank expects the sector to shrink in 2026. Peru imports three-quarters of its diesel and gasoline, so high oil prices flow straight into pumps and subsidies. Petroperu was cleared in May to seek up to $2bn in state-guaranteed loans; this is a lifeline the ruling party's own congressional leadership attacked as a bottomless barrel.

Opportunities

The upside lies in what the executive can do alone, quickly and cheaply: scrapping administrative procedures, establishing a single digital window for permits and, above all, finishing the January 2025 law that lets solar and wind compete on equal terms.

The law needs to decisively govern the power auctions that supply roughly half of national demand, which is still missing, and it is the key to a frozen project queue. Finishing it could be the most likely early positive surprise for investors, added to central bank independence, contract stability and the copper tailwind. For the first time in a decade, reforms can actually pass.