Argentina: Power Play

Buenos Aires –

Winter, just started in Argentina, is colder and darker than usual this year. The former because of unseasonably chilly weather that has Buenos Aireans bundled up and muttering “Muy frio” at every turn; the latter because of an energy crisis.

Power and natural gas shortages have meant rolling blackouts and rationing to businesses, underlining the fragility of the surprising recovery since the country’s economic crisis and devaluation in 2001. With residential power cuts looking increasingly likely, it has also put at risk the political popularity of the center-left Peronist government that engineered the recovery, led by President Nestor Kirchner, whose four-year term ends in October.


…Kirchner blames the energy shortages on utilities’ failure to invest to keep up with the growing demand for power and on energy companies for failing to expand production. The government fined Royal Dutch Shell for what it says is insufficient diesel supplies, and reports say the internal trade minister threatened to take over gas fields for 180 days if the energy companies failed to supply enough gas.

The utilities blame Kirchner for denying them a residential rate increase since 2003 to finance new investment. Everyone agrees that the severe imbalance between energy supply and growing demand cannot be solved quickly.

Forbes