Energy crisis: Government's debt to corporations exceeded USD 2 billion in the first quarter

Spending on subsidies is down 71% compared to the same period last year (EFE/Neil Hall)

The government accumulated Debts in the energy system exceeded USD 2,000 million in the first quarter This is more than double the fiscal surplus recorded between January and February of the year. These funds correspond to what companies in the sector should have received from the state to subsidize the difference between the cost of energy and the price actually paid by users.

The scheme of paying to hide financial accounts was not something that started during the administration. Javier Miley, but the payment chain has been at risk in recent months. While the industry is optimistic that the rate hike from April will allow for normalization, they remain cautious due to the cash balance filed.

A report from counsel Economy and EnergyFrom the former Vice President of YPF Nicholas Arceo, will cost US$666 million in subsidies to the energy sector in the first quarter of 2024. This is a 71% decline compared to the same period last year.

“Withdrawal of subsidies to the energy sector in the first quarter of 2024 has led to an increase in the national government's indebtedness of power generators and natural gas producers. The debt accumulated in the energy system due to the delay in the receipt of subsidies has now exceeded USD 2,000 million,” the Economics and Energy Profile said. .

Subsidies, Historical and First Quarter of the Year (Economy and Energy)

arising from the consultancy's survey data Argentina's Association of Budget and Public Finance Management (ASAP), Open Budget of the Ministry of Economy And this Central Bank of the Republic of Argentina (BCRA). It should be taken into account that accrued expenses are the origin of payment obligations, although this does not mean that they have been incurred.

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In particular, the government is yet to raise even the transfer of funds to be transferred to the institutions. Wholesale Electricity Market Management Company (Cammesa). Generators and transporters receive payments for their services through Cammesa, which acts as an intermediary with distributors, which are responsible for charging users. The latter maintain about $400,000 million in debt to the administrator as a mechanism to “fund” themselves in the face of payment delays in recent years.

Energy Secretary's Medium Term Objective, Eduardo Rodriguez Cirillo, Commesa should return to its original role. This implies that generators, transporters and distributors negotiate freely for energy. It is not yet clear how the system would work in that scenario.

Meanwhile, Cirillo moved ahead with an increase in tariffs so that transport and delivery items are covered by paying users. That “restoring fiscal balance” will start the wheel spinning again.

They received feedback from an important distributor Infobay In the first two months they paid 17% of Commesa's bill and after the March hike they paid 40%. “We will start paying 100 per cent every month from April-May. Therefore, the system should be more relaxed without accumulating new loans,” they estimated.

On the other hand, transport companies started receiving firm funding from Kammesa. It is worth clarifying that they are always carried out within 60 days. Approval was received from the Ministry of Energy based on Resolution 34/2024, which prioritizes the payment of loans over generators, as they are considered a public service, although only 3% of the total loan.

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There is great skepticism among those devoted to energy production, especially because of Cirillo's statements about “specific treatment”. [de la deuda] In the November-January quarter in order to neutralize the effects created by the neutrality of the official dollar.” Most of the USD 2 billion corresponds to this item.

The biggest fear of the companies is that the government will not want to recognize or significantly reduce their debts, although in energy they are promising that the idea is to start regularizing their shares. The thing is, since the price of energy is in the dollar, the devaluation of the official exchange rate last December meant a hike in COMMESA's debt to the energy sector.

The government knows that they cannot pay the subsidy payments indefinitely, apart from the fact that this is one of the key items that will need to be cut to consolidate the fiscal surplus in 2024. Removal of subsidies for electricity and gas is currently not progressing as expected. Originally planned by Govt.

The use of the base energy basket is again postponed (Nicolas Stuhlbarg).

It's about implementing it Basic Energy Basket (CBE) Originally expected in April and then postponed to May, it is now scheduled for June or July. All things being equal, 7 out of 10 users would pay less than 10% of the actual cost of energy consumed.

He was able to rebuild Infobay Official sources and the Department of Energy said the delay was related to the difficulty in cross-referencing the data needed to determine which households would proceed with the help of their ballots. The Chief of Staff and the Ministry of Economy are trying to find the right balance.

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Economic Minister's Roadmap, Luis Caputo, spending on tariff subsidies is expected to cut 0.5 points of GDP this year, and AMBA transport will add another 0.2 points of GDP. The bill ranges from USD 2,500 to USD 3,000 million. But as social conditions worsened, he sought a different calibration of adjustment.

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