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    Hydroelectric power plant concessions expire and debate on their future begins


    December 4, 2022 - CE Noticias Financieras

     

      As of August 2023 and until 2029, the concessions of 17 hydroelectric power plants expire. The Menemist decade privatized this energy generation model and granted the administration for thirty-year terms.

      A few months before the end of the first contracts, the energy debate takes center stage again and the discussion on the owners of hydroelectric power in Argentina will be key to resolve whether the State should control the generation of electricity or, as Senator Oscar Parrilli understands, "the lobbies' market" will be maintained.

      The senator, the leading voice of Kirchnerism in the Upper House, presented a bill for the public company Integración Energética Argentina (IEASA) to manage seven hydroelectric power plants, in association with the provinces that own the resource and with the participation of the private sector. The initiative was supported by legislators Silvia Sapag, from Neuquén, Martín Doñate and Silvina García Larraburu, from Río Negro, and Carlos Linares, from Chubut.

      The bill proposes that the company presided by Agustín Gerez "could retain 51% of the total domain to simplify and speed up the operation", although it is not a requirement included in the bill "to facilitate negotiations and agreements with the private sector and the provinces". "Oscar's rush has to do with the fact that the Secretariat of Energy did not move forward with more than a commission on the subject", a parliamentary source tells Tiempo. In March of this year he created a team together with the ENRE and CAMMESA to analyze the concessions, with no further news.

      For Alejandra Alderete, economist and member of Misión Productiva, the issue "is extremely important for the current administration" because practically 20% of the energy in the wholesale electricity market comes from hydroelectric generation. In fact, until 1994, the participation of hydroelectricity in the energy matrix was considerably higher, 43%.

      It happened that hydroelectric power plants entered a privatization phase in 1993 and a set of misguided policies -first from the dictatorship of 1976 and then from the Alfonsinist spring- led the State-owned companies to a management crisis. The deficit ended up in the hands of the private sector. Until then, the management of the energy sector was mostly state-owned and comprehensive, because the state-owned companies concentrated the different segments of the production chain. Thus, the main exponents until the Menemist cycle were Agua y Energía Eléctrica, Gas del Estado, Hidronor and YPF.

      Expirations

      As from August of next year, the concessions signed between 1993 and 1997 will begin to expire. Only in 2023 the following power plants are involved: Alicurá, El Chocón, Piedra del Águila, located in Neuquén and Río Negro and with a capacity ranging between 1040 and 1400 MW. The Neuquén Pichi Picún Leufú, Planicie Banderita and Futaleufú (Chubut) are added. The installed capacity ranges between 261 and 486 MW. The maturities of other hydroelectric plants will continue until 2029.

      94% of the country's hydroelectric power is at stake. "The decision taken in 2023 will set the course for the next maturities", assures Paloma Varona, also an economist and member of Misión Productiva. At the same time, the discussion on dams "becomes important at provincial level due to the use of water resources for the provision of water for cities and irrigation systems, a not minor issue in a scenario of climate change and with provinces such as Mendoza with frequent water crises", explains the specialist.

      Among the concessionaires, there are names and surnames of political and economic weight in several productive spheres of the country. For example, AES Corporation holds the Alicurá concession. It is a global company member of the Forbes 500, the list of the largest companies in the world.

      Central Puerto SA controls Piedra del Águila. Of great relevance in the thermoelectric sector, it is a holding of local capitals whose portfolio is made up of shareholders such as Nicolás Caputo, Carlos Miguens Bemberg, Guillermo Reca, the Escasany family and the Ruete Aguirre brothers.

      The participation of the Italian ENEL, in El Chocón and Arroyito, is also important. This week it gained prominence for having announced that it will sell its assets in Argentina, which include the concession of the distributor Edesur and the concession of El Chocón. "They are not going to do it, they warn only in this context of renegotiation due to the termination of the contract", estimates a source close to the Government. On the other hand, Pichi Picún Leufú belongs to Pampa Energía, the energy company managed by Marcelo Midlin.

      As for royalties, Verona explains that, although the private companies take the benefits corresponding to the sale of energy to the Wholesale Electricity Market, "each province enjoys a monthly percentage in the form of royalties according to the value sold". "

      The provinces are attentive

      As the Limay, Paraná and Uruguay rivers are the main source of hydraulic generation, between Neuquén and Misiones 68% of the country's installed hydraulic power is concentrated. For this reason, the governors of both provinces, Omar Gutierrez and Oscar Herrera Ahuad, respectively, are paying special attention.

      "That is why the possibility of the State granting management power to each province is in tension, for example Neuquén and Río Negro are asking to take part in the administration, operation, maintenance and commercial exploitation based on the power over the resource that was granted to them in 1994, although for this change to be possible a national law will be needed", details the economist Paloma Varona.

      Regarding the possibility of incorporating local businessmen to the participation of the administration, Parrilli's entourage estimates that "there will surely be interested parties" because "it is not necessary to be a multinational to participate in the sector".

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