MercoPress. South Atlantic News Agency

Argentina lowers tension to face energy crisis

Argentina's Energy Secretariat ordered this Monday a 5% tension reduction in the supply of electricity, from 220 to 209 volts, the first attempt to save energy without having to resort to programmed blackouts.

The decision with no expiration date and conditioned to "the evolution of the energy situation" was transmitted to grid distributors by the Wholesale Energy Market Administration, Cammesa.

According to Cammesa the availability of electricity in Argentina has been drastically affected by an insufficient supply of natural gas to thermal plants, low water level in hydroelectric producing dams and the imminent closure for maintenance of one of the country's two nuclear plants. However private analysts contend that the freezing of public utility rates since December 2001, when the Argentine economy collapsed, had a negative impact in maintenance and investment that was not visible while the economy was contracting. But now that Argentina is experiencing a strong rebound shortages (of natural gas for electricity production) are evident and "scheduled to continue" in the near future.

Over the weekend President Nestor Kirchner signed a decree giving priority to domestic residential natural gas consumption which has also meant a drastic cut in natural gas surplus sales to Chile and electricity to Uruguay. Energy Secretary Daniel Cameron admitted that his department has been for months elaborating contingency plans preparing for the energy situation faced by Argentina.

"Higher demand has been triggered by the persistence of unusual temperatures for this time of the year (averaging 34 Centigrade) in the whole country, and the increasing production activity as the economy rebounds vigorously", argue Argentine authorities.

"Currently we're delivering 14,700 megawatts per day, 1,500 Mw more than at the same period last year", said Energy Secretariat sources in Buenos Aires. The electricity tension reduction is expected to save 400 Mw per day which together with a similar volume to be supplied by Brazil should help to stabilize demand. Energy Secretariat sources admitted that "the lesser tension should not have an impact for residential clients, but could be felt by industry". Actually thirty of the country's major industrial consumers are already suffering restrictions.

The overall reduction that began this Monday at 16:30 hours will mean less intensity in light bulbs and a longer warming and cooking time for irons and microwave ovens. Spanish owned YPF-Repsol that supplies 30% of Argentina's natural gas trusts an agreement can be reached with the government "to help Argentina overcome the energy crisis". President Kirchner has blamed privatized public utility companies "which haven't invested since 1996" for the current shortages and has threatened to impose higher taxes to hydrocarbon exports.

Since Mr. Kirchner took office last year public utility companies have been demanding a rates adjustment to help reactivate the energy sector. Besides YPF-Repsol, the two major oil corporations in the natural gas business in Argentina are French Total and Brazilian Petrobras.