Amidst the crisis due to power cuts, the government ordered the intervention of Edesur for 180 days

The government organized the administrative intervention of the electricity distribution company Edesur for a period of 180 days following the prolonged service cuts of the last weeks of heat wave. For this he will appoint the mayor of Avellaneda from tomorrow Jorge Ferraresi as a speaker. Executive power will not take operational control of the company, but will have the power to control its investment plan and some service delivery.

The Ministry of the Economy assured that this administrative measure “will not affect the shareholder rightsand that this eliminates the risk that the parent company ENEL resorts to ICSID -the World Bank tribunal that settles contractual disputes between states and private companies- to claim against the national government for breach of contract. “If legal gravity prevails it wouldn’t make sense a complaint to ICSID,” an official source said.

ENRE, meanwhile, is assessing new $1 million penalties against the company for faulty service during the latest heat wave in recent weeks. As explained at GlobeLiveMedia economics team sources, in addition to the fine for $1.2 billion which has already been made official, there will be a similar sum which could become firm in the coming weeks. Also, prepare another battery of sanctions money for the cuts of the last few weeks. In total, they could add $2.7 billionanticipated the Minister of the Economy Sergio Massa.

“Power cuts in shops and homes have been the images that have marked the agenda of the last 15 days in Argentina and especially at AMBA. In this sense, the eminent decision of ENEL to put Edesur up for sale appears in a way as a factor of uncertainty”, mentioned the Minister and assured that the ENRE observed “non-compliance in investment works”.

In this sense, the person in charge of the Palacio de Hacienda assured that the intervention will have as its objective “the supervision of the works and the respect of the best service that the company must have. A situation like the one that thousands of Argentines have had to live in the last 15 days can no longer be tolerated,” Massa said.

On the other hand, the Minister of Economy informed that the Secretary of Energy, headed by Flavia Royon it will inform the capital market of the non-compliances detected by the ENRE inspection -in a preliminary report which will then be sent to Congress-. Additionally, he mentioned that the $2.7 billion fines provided by the Ministry of the Economy will be reimbursed to the users concerned.

“We want to make it clear that the concession contract nor him shareholder’s right, but that the State will monitor compliance with the contract. We cannot allow public service, a basic service, to be affected by corporate non-compliance,” Massa concluded in an announcement attended by the secretary for legal and technical affairs. Ricardo Casal and the head of the ENRE Walter Martello.

Sources from the economic team mention that in the diagnosis made by ENRE on the company’s quality of service there was elements: some who considered “chronic”among them one underinvestment which has not yet been estimated in monetary terms by the technicians, and a more pronounced deterioration once ENEL’s intention to divest from the distributor became known.

Edesur has been in charge of energy distribution for more than 2 million households of the Metropolitan Area of ​​Buenos Aires (AMBA). Its concession area covers an area of ​​3,300 km2, covering the center and south of the city of Buenos Aires and the entire southern suburbs. Its electricity network extends over 32,500 kilometers and represents, according to the company itself, 20% of the country’s energy.

Edesur, a company resulting from the process of privatization of the electricity service launched in 1992, belongs to the ENEL since 2008. The company, controlled by the Italian state, announced last November that it planned to sell assets in several countries to reduce its debt and complete a process of transition to cleaner energy.

inside of it divestment This includes Edesur and other assets the company owns in Argentina, such as the Costanera and Dock Sud thermal power plants, the El Chocón hydroelectric concession, transmission lines and power transmission.

The intention of the Ministry of the Economy to take drastic action against the electricity distributor had been anticipated in statements to Channel 9 by the Secretary for the Knowledge Economy, Ariel Sujarchuk. “I spoke with Sergio Massa; when he arrived from Panama, he went straight to the ministry. One of the areas of concern is the Edesur problem and the answer he gave me was ‘it’s not anymore’,” the manager had anticipated.

On the other hand, last week, the Ministry of Energy instructed ENRE – the regulatory body with jurisdiction over AMBA – to carry out a criminal complaint to the entire Board of Directors of Edesur for the crimes of embezzlement, fraud to the detriment of public administration and abandonment of people, due to the dramatic situation generated by the supply cuts in certain areas of CABA and Greater Buenos Aires.

In addition, ENRE had also been asked to speed up the preparation of a report on the status of the concession to be submitted to the bicameral Commission for monitoring public service concessions in order to advise on the advisability of terminating the concession.

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