The Argentine government moves into the power distribution sector
Argentina's government appointed an “observer” Thursday to oversee business operations at the power distributor Edesur SA, after the company reportedly failed to make a payment to a regulatory company.
The move comes after rampant inflation and a decade of capped rates have pushed Argentina's ailing electric utilities to the brink of financial collapse. Edesur reportedly failed to make a payment to Cammesa, a largely state-run company that manages the wholesale electricity market.
“The observer will have the most ample powers to do his job,” Argentina's Federal Planning and Infrastructure Ministry said in a statement late Thursday. The observer, Luis Barletta, was appointed to ensure that Edesur continues to provide power normally, the ministry said.
Argentina's top power companies are Edenor; Edesur, a unit of Italy's Enel SpA; and Edelap. They distribute electricity to millions of people in Buenos Aires City and metropolitan areas.
Unlike distributors in Argentina's interior that have been allowed to increase rates, the three companies have been largely unable to raise rates to compensate for annual inflation surpassing 20% and even greater wage increases.
In 2011, Edenor, the biggest distributor, reported a loss of 435.4 million Argetnine pesos (98.3 million US dollars), while Edesur posted a loss of 461 million Pesos and Edelap, 138 million Pesos. Operating costs last year rose 42% for Edenor, about 45% for Edesur, and 18% for Edelap.
The local daily Cronista reported that Edesur failed to make a payment for 148 million Pesos (32.5 million dollars).
Since 2003 Argentina's government has intervened in the management of other utility companies including natural gas distributor Metrogas and TGN natural gas transportation company. It has also nationalized flagship carrier Aerolineas Argentinas, the post office and a major water and sewage company, among other services.
This year, the state took a controlling stake in the country’s main energy company YPF, despite protests from Repsol and Spanish officials.
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Although having the government 'observe' you is quite amusing. Is this a prelude to 'nationalisation'? If so then I'd be really worried. Just look how they've fecked up YPF.
Admittedly it would cause some trouble with the inflation linked bonds they've been trying to save money on by cooking the figures but by forcing companies to charge based on a fantasy rate when they have to function at the real rate means disaster.
LEPRecon: Do you know how YBF is doing since it was expropriated by the government?
I think its a 'do as I say... not as I do' issue.....
Everyone does not know the true inflation rate even though the reality is exposed to them every day they go shopping. CFKC supporters are, in the main, poor and under-educated following her with blind faith based on a web of lies. They are easily exploited and manipulated because they have nothing to lose by believing in a false dream.
Interestingly, some of CFKC's key supporters in the past are now seeing the reality. No wonder CFKC is trying to rally the military around her.
All these short term popularist policies are becoming terminal.
It's like transferring the balance from a personal credit card you can't pay to another credit card with a higher rate but gives you a months leave on repayments. You are better for the immediate short term but soon just end up with the same debt you couldn't afford to pay whilst being charged more in interest.
That is how people go bankrupt.
CFK will nationalist a company her economic policies cause to start failing, steal all the cash (not that there is any left), gets the applause of her supporters for supposedly removing the influence of corrupt foreign companies and then ends up with another knackered company that can't make money and causes more strain on the national reserve causing her to nationalise another failing company etc etc etc.
That is how nations go bankrupt.
The gov't can't afford yet ANTHER $ losing business. Pretty soon this horrible wreck of a country is going to look like North Korea.
I hope the population WAKES UP they seem like they're in a stupor. I seriously can't believe they are blind to where all of this is leading. I know now all of them are as dumb as the ones that post on this board.
Scary Scary stuff...
This is why there is constant government meddling in the control of private buisness i.e. YPF being told they were not allowed to raise gas prices, the electric companies in BsAs being told they couldnt raise gas prices, the dairy industry (untill about a week ago being told they cant raise prices) howver at the same time these compnaies have seen operating costs (mainly wages) sky rocket as a result of inflation in the control. i.e. they are started turning a loss.
This is what happend when the government nationlised Aerolineas which has made a huge loss every year since nationilsation (it wasnt great before, but is worse now), YPF will be exacly the same the new CEO has threatened to quit twice becuase of government interference as we has suddenly relaised the compnay and the government do have the required capital to invest what is needed. they are currently trying to raise foreign investment in YPF (only China will be intrested and they wont want to pay for it they will want the oil for themsevelves). The Peronist economic model ever since Juan Domingo Peron has been to nationilse all the industry so the government control the jobs and labour market but they do this without the support of capital hense why the country is now hemraging money.
The econimc model is a complete and utter failure. We will see the nationilsation of the elctric compnay which will continue to be operated at a loss for short term populrist approval without any idea what it will do the economy long term.
Lose/Lose
As Think would say this is another nail in the coffin...it is pretty well sealed up by now though..so not too much longer before the end.
The policies will be maintained I suspect. This is a cornerstone of her policy. If she takes out the subs then it will hit inflation.
Personally I think that she will undertake “domino nationalisation” (where you quickly have to nationalise one business after another). She will do this when it becomes obvious that the companies can't meet payments. She will obviously blame them for the poor operation of the companies and say she is doing it for the people. The real difficulty will come when there are failures/blackouts etc AFTER nationalisation. This will be harder to explain away. Ultimately, she will then have to put up prices/take away subs and that is when I think we'll see a massive jump in inflation. This won't make any difference for the companies as, even with price rises; they will always be behind the inflation curve. Subbing power companies is and always has been VERY expensive. I think this will hold the key (along with Moyano and the Unions). Of our interest, 10, 11, 12 how do you see chain of events unfolding?
Nice little aside, a judge limed the increase for Aguas Argentina to 180%!! Are you kidding? There are still HUGE parts of BA Prov that don't have running water...even parts of downtown (villas)!
I bet he's just found out there is nothing in the asset register that can be found in the field.
I bet Kickitoff is ruling the roost and crashing the business like he and FatBoy did for Aerolinas Argentina.
has she got so little power,
that now she wants more power,
or does she just want to see her name light up.
at her peoples expence .?
Hyper capitalist model ! What is it ?
UK 50 % is about State Economy.
He has a lot of support in Argentina.
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