21 Decemeber 2013, News Wires – Argentina on has threatened to nationalise utility companies Edenor and Edesur after power outages blanketed large swaths of the capital and surrounding suburbs just ahead of the South American summer, according to reports.
The government of President Cristina Fernandez de Kirchner has expropriated several companies during her six years in office, including a water company, the oil company YPF and the country’s biggest airline, Aerolineas Argentinas, Reuters reported.
The goverment comments may disappoint observers who had expressed optimism that an initial compensation deal struck with Repsol recently for its YPF stake showed new signs of economic pragmatism from a government with a history of haphazard government meddling and sovereign default.
“If they are not willing to give people the service they deserve, we will be willing to take over that service,” cabinet chief Jorge Capitanich was quoted as saying by the news wire.
Companies had also begun taking a fresh look at Argentina amid what Tudor Pickering Holt last week called decreased political risk. The US Energy Information Administration estimates the country contains the world’s second-largest shale gas reserves and fourth-largest shale oil reserves.
Edesur is controlled by Endesa, a subsidiary of Italy’s biggest utility, Enel. Edenor is owned by the Argentine company Pampa Energia .
Shares of Edenor ended 15.1% lower at 2.3 pesos in Buenos Aires on Thursday.
“Just as we did with Aerolineas Argentinas … and YPF, we will not hesitate to make the decisions required if the companies Edenor and Edesur do not restore electrical supplies immediately,” Planning Minister Julio de Vido was quoted as telling the state news agency Telam.
The companies could not immediately be reached for comment by the news wire.
The energy sector in Latin America’s third-biggest economy has been beset by limp private investment and surging demand.
Many analysts say government-imposed energy prices, held nearly flat since the country’s 2001-02 financial crisis despite high inflation, have hurt the sector.
The government said in November that it would raise fees to fund upgrades, and that utility companies would not benefit.
Blackouts are common in Buenos Aires in summer months when electrical demand spikes with temperatures, often drawing residents into the streets for protests.