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The Argentine government moves into the power distribution sector

Friday, July 13th 2012 - 06:52 UTC
Full article 23 comments

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. Read full article

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  • LEPRecon

    Surely the Argentine government should applaud them for defaulting on debt. That standard procedure for Agentina, isn't it?

    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.

    Jul 13th, 2012 - 07:12 am - Link - Report abuse 0
  • Ahab

    I don't understand why the government cannot simply admit the correct inflation rate. Everyone know that the “official” figures are complete crap.

    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?

    Jul 13th, 2012 - 07:24 am - Link - Report abuse 0
  • Frank

    'Surely the Argentine government should applaud them for defaulting on debt. That standard procedure for Agentina, isn't it?'

    I think its a 'do as I say... not as I do' issue.....

    Jul 13th, 2012 - 08:16 am - Link - Report abuse 0
  • Welsh Wizard

    They will be nationalised. The deficit they have to operate with will not lessen, it will only widen if rates are kept as they are and inflation carries on. As a result they will continue to find it difficult to make payments (not because they are and evil corporation) but because they just don't have the cash. The government will nationalise them but this won't change the fact that there is still a massive hole in their books. The company will then become a drain on the national purse.

    Jul 13th, 2012 - 08:29 am - Link - Report abuse 0
  • Ahab

    @4 Sounds like business as usual for the CFK economy model.

    Jul 13th, 2012 - 08:57 am - Link - Report abuse 0
  • ElaineB

    @2 Yes, admitting the true inflation rate would mean them paying the true rate on the bonds.

    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.

    Jul 13th, 2012 - 09:12 am - Link - Report abuse 0
  • Ahab

    @6 Elaine

    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.

    Jul 13th, 2012 - 09:39 am - Link - Report abuse 0
  • yankeeboy

    Hmm another thing I predicted a couple weeks ago coming to pass...I am on a roll!!

    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...

    Jul 13th, 2012 - 11:37 am - Link - Report abuse 0
  • EnginnerAbroad

    The problem with the Argentine model is that the Argentine government do not want private companies to make a profit. They believe that people set up buisness', create jobs and grow the ecoonomy out of the goodness of their own hearts.

    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.

    Jul 13th, 2012 - 12:25 pm - Link - Report abuse 0
  • yankeeboy

    9. In the long run, that is interesting to think about. if these electricity policies are maintained their only solution will be to start rationing the products. There is a limited supply, the grid is failing, imports of maintenance equipment is not allowed so what do you do? I think you start having rolling blackouts when there is extreme weather, huge increases for corps (large users) until they refuse to pay any more.
    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.

    Jul 13th, 2012 - 12:47 pm - Link - Report abuse 0
  • Conqueror

    How long do we think it will be before the malvinistas won't be able to post anything because they have no electrical supply. An interesting idea will be to monitor the electrical blackouts. If they can still post when most places in argieland are blacked out, it will point to government supplies.

    Jul 13th, 2012 - 12:57 pm - Link - Report abuse 0
  • EnginnerAbroad

    @10 No doubt we will discuss this on the other board but with Moyano growing in power and effectivly controlling the gas supply network (as we saw a few weeks ago) he is put in a very controlling position should the electric network begin to fail. Im sure CFK would state that she restricts price rises on energy to combat inflation without relaising it is happening anway and only making compaies lose money and therefore not finacial viable. I predict a huge exodoss of foreign compaines from Argentina in the next 12 months and sonner if the administartion does not cut its meddling in private companies.

    Jul 13th, 2012 - 01:00 pm - Link - Report abuse 0
  • Welsh Wizard

    @10

    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?

    Jul 13th, 2012 - 01:23 pm - Link - Report abuse 0
  • yankeeboy

    13. You are right, they has done this time and again starting with Aguas Argentina, limit the amount they can charge, bankrupt them, take it over then immediately increase rates. Plug in anything she has nationalized FOR THE GOOD OF THE PEOPLE. What a crock.
    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)!

    Jul 13th, 2012 - 01:28 pm - Link - Report abuse 0
  • Welsh Wizard

    @14 Yup, YPF have just out up prices by 7%. Pretty much the first thing they did after nationalisation.

    Jul 13th, 2012 - 01:42 pm - Link - Report abuse 0
  • ChrisR

    Anybody heard what has happened to the YPF new CEO's report on the state of the business?

    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.

    Jul 13th, 2012 - 05:35 pm - Link - Report abuse 0
  • British_Kirchnerist

    Looks like another nationalisation coming up...good =) Lets hope Cristina is more successful than the pathetic British government at keeping heat and electricity affordable for the people, a big scandal over here at the moment caused by British politicians supporting the hyper capitalist model advocated by the posters above

    Jul 13th, 2012 - 06:01 pm - Link - Report abuse 0
  • briton

    The Argentine government moves into the power distribution

    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 .?

    Jul 13th, 2012 - 06:44 pm - Link - Report abuse 0
  • Max

    & 17

    Hyper capitalist model ! What is it ?
    UK 50 % is about State Economy.

    Jul 13th, 2012 - 08:01 pm - Link - Report abuse 0
  • slattzzz

    Right Bk whatever , yankeeboy do you know Fridays euro million numbers need a new garage roof mate

    Jul 13th, 2012 - 09:33 pm - Link - Report abuse 0
  • Pirat-Hunter

    This is great Argentina will be hable to control the price of energy and with it the cost of production, we love you CFK and we support you 100% don't pay any attention to the ignorante.

    Jul 14th, 2012 - 07:17 pm - Link - Report abuse 0
  • Pete Bog

    @21 Moyano does not like CFK.

    He has a lot of support in Argentina.

    Jul 14th, 2012 - 09:45 pm - Link - Report abuse 0
  • Pirat-Hunter

    #22 Moyano is the reason for the meat market and farms to go broke thanks to the truck and port strike I hope someone takes moyano judges him and execute him on the spot for treason. Moyano has british support not Argentine support, as a matter of fact a group of people are actively looking to execute him with the support of all Argentine's.

    Jul 15th, 2012 - 12:33 am - Link - Report abuse 0

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