Why Edesur is being sold: Fare delays, regulatory issues and its own complications

The local propensity a violation regulatory frameworks continue to fuel the exit of large international companies. The local sharksopportunity hunters with a good finish in politics, celebrate.

Over the past twenty years, the regulatory framework of the concessions was almost never respected of electricity distributors. The companies were able to apply the complete revision of the tariffs – a principle established in the privatizations of these companies, which were previously public – only in 2017 and 2018. The rest of the time they were subject to the decisions of their regulators. As such, they were arbitrary and without the application of a set formula.

Enel has a generation business and a distribution business. It will go away from both. But the first one is closer to departure. On the other hand, the distribution is more complex, concentrated in Edesur. The companies understand that electricity rates in Buenos Aires are 300% lower..

Everything indicates that the property of Edesur It will end up in national hands. This has almost always happened in the two decades of migration of foreigners. In Edenor, Electricity of France He gave his share to Pampa (by Marcelo Mindlin, who then transferred it in 2020). in the subway, British gas also renounced. In Aguas Argentinas (today Aysa), the French group Suez he was deposed by the national state, in exchange for a subsequent compensation.

At Edesur, the country’s problems are combined with the company’s inconveniences. To the regulatory uncertainty was added the political harassment: mayors spent all of 2020 demanding that the nation state revoke this concession. The problem is that no one was interested in hiring him. Additionally, several engineers who have worked at the company say that a significant investment is needed to improve their infrastructure.

“We need a clear and stable regulatory framework.” “There is no definite rule, whatever, about whether rates follow inflation, wage level, INDEC or some mathematical formula that is not a political decision,” she explained. Claudius Cunga -the Brazilian who takes care of Edesur-to clarion at the beginning of the year. At the time of that interview, thousands of homes were without electricity.

This was another of Edesur’s characteristics. A more cuts than Edenor, owner of the other half of the concession. They both shared exactly 30 years ago, the city of Buenos Aires and the suburbs in the privatization of the state-owned company Segba. The latter was a nightmare, with its “scheduled outages” (several hours a day) and bureaucracy typical of a horror film.

“In Edesur we have two thirds of the city of Buenos Aires and Edenor has the other third. When there is a cut, the repair times in the city of Buenos Aires are longer, because we have to break the sidewalk, because I have a lot of services that pass there, cables, communications. Subsequently, in the concession part of the province. we have had much more real estate growth and development than in recent years than Edenor,” Cunha apologized when questioned about it.

Edesur brought huge returns to its first shareholders, those of the 1990s: the Pérez Companc group and the Chilean Enersis. The property then passed into the hands of the Spanish (Endesa) and Italians (Enel), which coincided with the moment in which the regulations were changed.

In any event, even when all contracts were fulfilled, the company was embroiled in a cutback in 1999 that left thousands of businesses and homes with ruined appliances. The company had to compensate for that damage. of an outage lasting several days.

The pendulum of implied local politics rate freeze between 2002 and 2015strong increases between 2016 and 2019, and the return to the postponement of the polls from the beginning of the government of Alberto Fernández until the hiring of Sergio Massa as Minister of Economy.

In the above sector they clarify that the increases in the administration of Mauricio Macri have not gone directly into the coffers of the companies. “Those of 2016 predicted that households would pay a higher percentage of the cost of electricity production”, they deny.

The privatizations of utilities are essential to understanding convertibility and the 1990s. Major international players have come to shell out hundreds of millions of dollars to acquire control of electricity, water or gas companies. But that pattern collapsed with the 2001-02 devaluation: all contracts were broken and the regulatory framework remained -almost- like a piece of paper.

While Edesur’s future looks national, the task is far from easy. A consortium led by Daniel Vila, José Luis Manzano and Mauricio Filiberti he kept most of Edenor. This trio of businessmen orbit around Sergio Massa, one of the parties in the governing coalition. The approval of the operation by the Executive Power still had some internal deliberations.

Investors interested in Edesur expect political parties to agree on a long-term economic policy, including tariffs. The oscillation between Kirchnerism and Macrism, going from one extreme to the other, harms that mission. Meanwhile, foreign giants that have sunk fortunes continue to retreat, and bargain hunters, who can buy a company that was worth $5 billion for $100 million — like Edenor — are in luck.