MercoPress. South Atlantic News Agency

Rift over President Kirchner's economic policies.

Argentine Minister of Interior Anibal Fernández ratified this Sunday that no public utility rates will be modified until all contracts have been reviewed, adding that those companies that did not keep to contract “will have the concession rescinded”.

"Accords must be honoured, and if I did my share but the other side did not, then I'm entitled to take the contract away and give it to a third party who must respect the rights of the clients", underlined Mr. Fernández.

Mr. Fernandez and other president Kirchner administration officials' strong remarks over the weekend follow a statement last week by Finance Minister Roberto Lavagna who addressing businessmen said he favoured an upward adjustment of public utility rates, particularly for natural gas and electricity.

"Mr. Lavagna statement is obvious", said Mr. Fernández who added that "?we're not going to move a iota from our announced policy, there's no chance of sitting to talk about public utility rates until we've reviewed contracts".

Earlier in the week Mr. Lavagna had admitted before a business forum that "regarding gas and electricity we have some adjustments to make".

Chief cabinet minister Alberto Fernández was also adamant on the subject stating that "above all speculation and Mr. Lavagna's wishes, we will continue to work as we have done so far, reviewing each concession, each commitment and in that context we will verify the quality of the rate. We will then see how to correct them without leaving clients unprotected".

Mr. Fernández added that "we're not interested in the companies leaving, or having them back in government, or waiting to hand them to American companies as rumours have it. President Kirchner has been plain clear on the issue from the very first day".

In a similar incident last August involving Vice-president Daniel Scioli who anticipated an October hike in public utility rates, President Kirchner had him removed from the inner circle of government decision making and replaced the Ministry of Tourism hierarchy over which Mr. Scioli had control.

This is the first time a serious rift between the political and economic branch of Mr. Kirchner becomes public.

Since the meltdown of the Argentine economy December 01/January 02, when the currency was devalued and public utility rates frozen, foreign investors have been strongly demanding an adjustment.

The Kirchner administration believes foreign investors were more interested in transferring profits overseas than up grading the service.