MercoPress. South Atlantic News Agency

Argentina: Tax breaks for energy sector

President Néstor Kirchner and Federal Planning Minister Julio De Vido made the announcement flanked by most of the Cabinet, businessmen and trade union leaders in Government House yesterday.

Kirchner encouraged businessmen to follow the "extreme efforts" that the government is undertaking to facilitate tax breaks to investments in the energy sector. "We are making a very large fiscal effort," said the President, and reassured the audience that "the investment effort will leave great results for Argentina."

The bill calls for the speedy reimbursement of value added and income taxes to companies sector, the exemption of import duties on capital assets, and access to adjacent areas for companies that are already working in a given area.

These benefits in value added tax, income, and import duties will be maintained for 15 years for new areas, and 10 years for the subplots of concessioned areas.

Federal Planning Minister Julio De Vido began his presentation highlighting the "strict compliance" of investments and planned works within the Federal Energy Plan a year ago. The official highlighted that Argentina currently has a surplus of natural gas and oil, "but we have to be prudent and foment the exploration and exploitation" of these natural resources. He added that the supply of energy will be guaranteed based on the response of businessmen to these incentives.

De Vido also explained that the state energy company ENARSA "will have a key role as a vehicle for companies to access the country." The energy minister said that the hydrocarbon production potential in the country is high, with 13.5 years of natural gas and 10.5 years of oil reserves. While oil production has stagnated since 1998, and even dropped, natural gas production has risen along with rising demand.

In turn, Kirchner stressed the magnitude of the challenge that lies ahead and praised "the great effort, an extreme effort that all Argentines are carrying out" by giving up this tax revenue for greater investment and production. "Our wager is a joint success" between the state and the private sector, Kirchner said.