Argentina
Argentina’s Energy Policy Lobbying Heats Up as Peronists Push for Government Intervention While Fernández’s Inner Circle Aims to Raise Tariffs, Cut Taxes
Tue 10/15/2019 10:08 AM
Relevant Document:
Peronist Party Policy Proposals
Political groups within Peronist presidential candidate Alberto Fernández’s coalition are increasing efforts to try to influence the types of energy policies that could be implemented should Fernández win the general election. The lobbying started to heat up after Peronist party members submitted a document to Fernandez last week that includes a list of proposals that focus on 17 sectors of the country’s economy. It is the most detailed list of policy proposals to date to originate from the party that would assume power if Fernández were to win the presidency. Most polls indicate that he will win the first round general elections by double-digit margins.
However, two economists who are a part of Fernandez’s inner circle - former Finance Secretary Guillermo Nielsen and former Central Bank Director Matías Kuflas - and who are in charge of the team forming Fernández’s energy policy objectives are not keen on some of the most controversial proposals relating to the country’s energy policy, sources told Reorg.
Recommendations include re-establishing price controls for electricity and gas tariffs, preventing the automatic transfer of dollar appreciation to gas prices and creating a commission to establish prices based on “the real cost of production and transportation of gas and electricity” as opposed to the market price. If implemented, these measures could have a detrimental effect on energy producers and generators such as YPF, Pampa Energia, MSU Energia, Albanesi and Genneia.
A source from Fernández’s inner circle told Reorg that while the document should not be interpreted as Fernandez’s official position, the team agrees with many of the Peronist group’s proposals about the country’s general economic situation. And since Fernández is viewed as bridging the divide between his faction and the “Kirchnerite” faction of his running mate Cristina Fernandez de Kirchner to form their Frente de Todos coalition, many of the recommendations could be considered even if they are not all implemented.
On the other hand, a source helping the team of advisors working on the candidate’s energy policy told Reorg that they are working on a tax ceiling law that would provide fiscal benefits to oil and gas producers and that they aim to pass a sharp hike in tariff prices. The plan is to get the bill passed in the first 10 days of his administration, according to the source. “The aim is to give oil producers stability through this law, and it will most likely happen as Fernández’s team have built connections with the unions, oil producers and provincial governments to get these initiatives passed,” the source told Reorg.
Below is a more detailed list of the most salient measures proposed:
A condensed capital structure for the Republic is here:
An Excel download with a detailed breakdown of each tranche can be found HERE.
Peronist Party Policy Proposals
Political groups within Peronist presidential candidate Alberto Fernández’s coalition are increasing efforts to try to influence the types of energy policies that could be implemented should Fernández win the general election. The lobbying started to heat up after Peronist party members submitted a document to Fernandez last week that includes a list of proposals that focus on 17 sectors of the country’s economy. It is the most detailed list of policy proposals to date to originate from the party that would assume power if Fernández were to win the presidency. Most polls indicate that he will win the first round general elections by double-digit margins.
However, two economists who are a part of Fernandez’s inner circle - former Finance Secretary Guillermo Nielsen and former Central Bank Director Matías Kuflas - and who are in charge of the team forming Fernández’s energy policy objectives are not keen on some of the most controversial proposals relating to the country’s energy policy, sources told Reorg.
Recommendations include re-establishing price controls for electricity and gas tariffs, preventing the automatic transfer of dollar appreciation to gas prices and creating a commission to establish prices based on “the real cost of production and transportation of gas and electricity” as opposed to the market price. If implemented, these measures could have a detrimental effect on energy producers and generators such as YPF, Pampa Energia, MSU Energia, Albanesi and Genneia.
A source from Fernández’s inner circle told Reorg that while the document should not be interpreted as Fernandez’s official position, the team agrees with many of the Peronist group’s proposals about the country’s general economic situation. And since Fernández is viewed as bridging the divide between his faction and the “Kirchnerite” faction of his running mate Cristina Fernandez de Kirchner to form their Frente de Todos coalition, many of the recommendations could be considered even if they are not all implemented.
On the other hand, a source helping the team of advisors working on the candidate’s energy policy told Reorg that they are working on a tax ceiling law that would provide fiscal benefits to oil and gas producers and that they aim to pass a sharp hike in tariff prices. The plan is to get the bill passed in the first 10 days of his administration, according to the source. “The aim is to give oil producers stability through this law, and it will most likely happen as Fernández’s team have built connections with the unions, oil producers and provincial governments to get these initiatives passed,” the source told Reorg.
Below is a more detailed list of the most salient measures proposed:
- A freeze on electricity tariffs for 100 days to evaluate prices.
- Creation of an “integral tariff revision commission” to establish prices based on “the real cost of production of transporting gas and electricity.”
- Oil and gas prices being fixed on a national level.
- Appreciation of the dollar cannot be automatically transferred to consumer tariff increases.
- Creation of an “observatory” dedicated to monitoring the cost of production of energy, to establish and monitor the real-time cost of crude oil and natural gas. The observatory cannot be led by officials who previously had private-sector positions in the energy sector.
- Intervention in the Argentine natural gas regulator, Enargas, and the Electricity National Regulatory Entity, or ENRE, to replace their boards, as they represent “exclusively the interests of the company operators.”
- The proposal recommends that the state ensure that that gas and electric services have a minimal cost for users and that costs are established according to users’ incomes, allowing for a just profit and reasonable concessions.
- Infrastructure plan for Vaca Muerta Shale formation to promote the distribution of gas to generators, industries, consumers and ports in various parts of the country.
- Shale fields should develop according to the necessities of the socioeconomic development of the country and not particular actors;
- YPF should be supported so it can be the main company to drive its development.
- Shale fields should develop according to the necessities of the socioeconomic development of the country and not particular actors;
A condensed capital structure for the Republic is here:
An Excel download with a detailed breakdown of each tranche can be found HERE.
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