Argentine government seeks to regain control of hydroelectric power plants

The national government is seeking to regain control of the hydroelectric concessions privatized 30 years ago, during the government of Carlos Menem. The first contracts expired on August 11, but were extended for up to 120 days, while others will expire in 2024.

Article 78 of the 2024 Budget Bill stipulates that at the end of the concessions, "the administration, operation and exploitation of each of the hydroelectric developments will be assumed by Energías Hidroeléctricas Sociedad Anónima Unipersonal (SAU)", a new vehicle of Energía Argentina (former Enarsa), "with the purpose of ensuring the full operability of the plants, the continuity of the services and the correct operation of the facilities, without prejudice to the eventual liabilities for the obligations assumed by the current concessionaires".

The former Enarsa will be able to sell the energy to the Compañía Administradora del Mercado Mayorista Eléctrico (Cammesa) and will be in charge of the eventual transfer of the personnel and contracts related to these plants, as well as of the "studies, projects, constructions, renovations and expansions of the assets reverted to the national State".

If approved in the National Congress, once the presidential elections reconfigure a new political framework in Argentina, the State would keep the "water business" for between 100 and 200 million dollars a year.

The four power plants that would return to public hands are Alicurá (AES), El Chocón - Arroyito (Enel) and Cerros Colorados (Orazul Energy), as from December 9; and Piedra del Águila (Central Puerto), between February and April next year.

In any case, this or the next government could decide to extend the extension until August 2024. The contracts of Los Nihuiles, Diamante and Río Hondo hydroelectric plants will expire next year. Due to the repeated breaches of the contract by the national government, the companies are considering filing a lawsuit before the ICSID if the concession contract is terminated and there is no compensation.

The vision of the national officials today is that the infrastructure was built by the national government and the resources effectively belong to the provinces, so they want to share the participation in the management of the dams. The Government is exploring alternatives to grant an Operation and Maintenance contract to the private companies, which have the expertise but are not interested in assuming that risk with low profitability and without the ownership of the asset.the payment made by Cammesa is 20 million dollars per year.