Argentina creates state energy company

BUENOS AIRES - - Argentina officials said recently it would create a new state energy company to take part in exploration and pipeline projects with the private sector as part of a plan to cope with its worst energy crisis in 15 years.

Argentina has already started rationing power, cutting natural gas exports to Chile and Brazil and squeezing supplies to local industry to contain an energy crisis and avoid blackouts during the looming Southern Hemisphere winter.

"The Argentine state has decided to form the company Energia Argentina S.A.," Planning Minister Julio De Vido said as he unveiled the new government energy plan at a ceremony at the presidential palace in Buenos Aires.

"It aims to take part in hydrocarbon and energy markets to exploit resources and develop a sustainable (power) infrastructure," he said.

The Argentine state, which privatized the energy sector in the 1990s, will hold a 53 percent stake in Energia Argentina and will float 35 percent, while Argentina's provinces will control 12 percent.

Energy Secretary Daniel Cameron said the government would also increase export taxes on crude oil by 5 percentage points to 25 percent and on butane, propane and liquid gas by 15 percentage points to 20 percent.

Argentina will also impose a 5 percent tax on gasoline exports, Cameron added. The revenue will be used for infrastructure projects.

BLAME GAME

The government blames the energy crisis on the power companies, saying they invested too little in infrastructure. But the companies argue that a rate freeze imposed during the economic crisis in 2002 hammered their bottom lines.

"I am going to take all necessary measures to ensure Argentina has the gas supply ... to get through 2004, is stable in 2005 and has a strategic energy (plan) in 2006," President Nestor Kirchner warned energy executives at the ceremony. "You all know where the crisis stems from, and all know the government has practically no responsibility beyond having trusted a little too much."

Some Argentine companies have taken out television and newspaper ads urging consumers to pitch in and avoid blackouts. Banks have pledged to dim their lights, and Buenos Aires is even considering suspending night soccer games.

Luckily for Argentina, meteorologists are forecasting the Southern Hemisphere winter from June to August will be mild, meaning less usage of heating fuels than last year.

The United States has voiced fears the energy crisis will undermine Argentina's economic recovery, though the Argentine Central Bank estimates the crisis will shave "well under" 1.0 percentage point off 2004 growth, which has been forecast at over 8 percent.

The crisis has caused problems with Chile, which has warned the gas export cuts have "tainted" diplomatic ties. A deal to pipe in Bolivian gas on the condition none of it makes its way into Chile, which for years has had a border dispute with Bolivia, has only compounded matters. Argentina is also getting fuel oil shipped from Venezuela.