MercoPress. South Atlantic News Agency

Argentina launches plan to save energy

Argentina last weekend launched a plan to reduce domestic energy consumption in an effort to confront the country's deepening energy crisis. The government also confirmed that in the coming days it will be announcing an “integral energy plan” to “resolve once and for all Argentina's energy problems”.

The campaign to reduce energy consumption consists of a set of rewards for those who consume 95% or less gas and electricity than during the same period a year ago.

However households and residences that use more than 95% of the their last year energy consumption will have to pay up to 50% more for each Kwt/h in case of electricity and up to 40% more for every cubic meter when gas.

"By saving energy, you win and the country wins", is the slogan of the aggressive campaign that intends to at least stabilize the country's growing demand for energy. Even when electricity and gas production increased 14% last March compared to March 2003, demand expansion averaged over 20%.

Since March many of the leading industries of the country have had their power supplies interrupted and for a few days the government was forced to lower the voltage in the national grid to avoid blackouts by households.

Argentina's strong economic recovery plus low energy costs since public utility rates have been frozen in pesos since January 2002 are partly to blame for the energy crisis besides the fact that private investors, faced with growing instability in the country for the last few years, have not felt incentives to expand production.

The energy crisis could cost Argentina a full one point of economic growth this year.

But the system of rewards and penalties has awoken concern among certain groups, particularly consumers, who claim that the measure is a disguised price rise.

President Nestor Kirchner administration's decision to privilege domestic supply drastically reducing surplus gas exports to Chile has caused a serious bilateral dispute.

Chile argues that international protocols must be honoured and Chilean president Ricardo Lagos has warned that the issue undermined confidence. Chile depends heavily on Argentine gas for electrical power generation.

President Kirchner on his return private trip to United States is expected to announce an "integral energy plan", which apparently would include a state energy company, Energía Argentina S.A.