The Government decided to move forward with a 50% reduction in the debt for energy subsidies that it owes to electricity generators and gas producers. -oil companies-. The Ministry of Economy will open the issuance of the AE38 bond for about $600,000 million during the next week and is betting that the improvement in the short-term financial perspectives – with a drop in country risk – will result in a jump in the value of that security.
The total debt that the Wholesale Electricity Market Administration Company (Cammesa) has with energy and oil generators until last month reached $1,074,258,000,000 ($1.07 billion) or the equivalent of about 1.25 billion dollars. The Treasury will have to take care of that, by maintaining subsidies for households -by setting prices that do not fully reflect the costs of the system-.
The proposal, said the owner of a medium-sized energy company – which contributes less than 1000 MW – would have a “outright rejection“of a large part of the electricity generators but the approval of gas producers such as YPF – which is owed about 140 million dollars for gas and another US$ 60 million for electricity from YPF Luz – and PAE.
Central Puerto and AES would be against, while Pampa Energy It could give its approval if future sustainability is guaranteed, according to market sources consulted by Clarín. In a statement to the National Securities Commission (CNV), Marcelo Mindlin’s company announced that it will make an adjustment to its balance sheet of US$34.6 million to account for this debt.
To a greater or lesser extent, electricity generators have leveraged themselves in recent years with loans from international banks to finance their investments. The change in Plan Gas contracts and the Power Purchase Agreement (PPA) would make it difficult to pay these credits in the future and could mean a medium-term deterioration in the availability of energy.
The debt for energy subsidies
In the first quarter of the year, the Government did not pay most of Cammesa’s operations and other gas subsidies for $1.9 billion, a central element to have obtained a primary fiscal surplus of $3.86 billion and a positive financial result of $1.1 billion on a “cash” basis, what was actually paid. If that debt had been canceled, the imbalance in public accounts would still persist after the payment of interest on the debt.
The official view is that an enormous effort had previously been made to pay the October and November subsidies when the new Government had just taken office, lifting the imbalances left by the previous one.
The unpaid operations were the purchase of gas from oil companies –YPF, PAE, Total Austral, Pampa Energía and Tecpetrolmainly – for electricity generation, which has contracts through the Gas Plan, and the purchase of the energy produced by companies such as Central Puerto, Pampa Energía, YPF Luz, AES, Enel, Albanesi, MSU, Genneiabinational hydroelectric plants and nuclear power plants, among others.
He Secretary of Energy, Eduardo Rodríguez Chirilloimplemented Minister Luis Caputo’s decision on Monday night with the signing of the resolution 58which will be published in the next few hours in the Official Gazette.
The document, which you accessed Clarionestablishes a payment regime “exceptional, transitory and unique for the balance of economic transactions of the Wholesale Electricity Market (MEM) of December 2023, January 2024 and February 2024with the aim of reestablishing the payment chain for current economic transactions and thereby preserving the supply of the public electricity service, in the face of the deficit of resources available in the Wholesale Electricity Market Stabilization Fund (MEM) and the emergency.” declared by decrees 55 and 70 of 2023, in the first days of the presidency of Javier Milei.
Within a period of two business days, Cammesa will have to “prepare and determine with each of the creditors” the corresponding amounts. And in five business days the debt will be canceled with the delivery of the AE38 bond for the outstanding balances of December 2023 and January 2024, which should have been paid in February and March, respectively.
While, Economy has the money from February (about $550,000 million) and will release the funds once the parties give the Government approval with the signing of individual agreements.
According to the owner of a generator, it is an “extortion” because the money corresponds to what Cammesa already collected from the distributors, who in April paid 89.34% of the energy purchase – an amount considerably higher than the 40% that they had been driving previously.
In a few more days, the March transaction will expire, which would be guaranteed after the rate structure was recomposed (increase), which better reflects energy costs (less subsidies). While in January, due to the effect of the previous devaluation, users paid 22% of the full price of electricity, in February they paid 64%.
Finally, the Energy resolution also enables the opening of a new payment plan in 48 installments (4 consecutive years) for electricity distributors that they had delays again with Cammesa in February and March while they did not have the rates recomposed. Starting in April, firms like Edenor and Edesur They will have to pay 100% of the transaction within a period of up to 30 days.
