at the school of commerce harvardone of the most prestigious in the world, a round table was held on energy issues. There they discussed a topical European issue, on the coexistence between continuing to use gas or allocating more resources to renewable sources.
Francesco Starace, CEO of Italy’s Enel, was one of the participants. When they asked him to leave Argentina, his definition was sensational. “They have the most bizarre regulation in the world”he expressed.
“So it can’t be”, noted the Italian executive. “We see this working with local investors in the future,” added. Although Starace is probably unaware of the background, the phrase was reminiscent of the Eskenazi group taking control of the YPF because they were “experts in regulated markets”.
Enel is a 75% shareholder of Edesur directly and indirectly. The company has decided to sell its assets in the country. Although it is said that there is interest in its generating business (power plants), possession of Edesur seems less desirable. “Over the past 20 years, the regulatory framework has only been applied in two,” the company often complains.
In Edesur they say the sale will be “a competitive process that will start from a bank”. “There are no restrictions on the participation of anyone from abroad. We look for the best proposition for both shareholders and customers”, detailed.
In this type of operation, companies often hire investment banks. The generating business is estimated to be worth about 300 million dollars. However, distribution (Edesur) seems more difficult to evaluate. “If a new owner comes along, he will have to invest heavily,” other generators, officials and former employees point out.
Enel lost 93 million euros in Argentina in your distribution business. It was the first nine months of 2022. (between January and September), according to its latest presentation to investors.
The panel in which Starace participated at Harvard also presented leading figures in the energy sector at a global level, such as Cameron Hepburn -professor at Oxford- and Jean-Michel Glachant, of the Florence School of Regulation. The seminar was held at the Harvard Environmental Economics Program School of Government.
LEuropean countries were supplied with Russian gas, a relationship which had to be severed after the invasion of Ukraine. More than half of the gas consumed in the European Union comes from this trade link. Since March, several countries have been discussing their energy present, past and future, Germany, which had bet heavily on renewables -for years, when it was very expensive- aimed again at more “renegade” forms like coal, as long as it doesn’t depend so much on Russia. francid has enhanced its nuclear capability.
In this sense, the European leadership, which was moving towards the energy transition to stop using fossil fuels by 2030, is starting to reconsider this possibility. They have to spend this winter, in which the temperature gets hotter than expected, and the next, at least. Germany has gone to buy LNG (liquid gas, the most expensive) to the United States, Qatar and Australia, to ensure this input for industries and homes.
Starace, from Enel, had explained the dichotomies between gas and renewable energy. But He clarified that this had nothing to do with leaving Argentina. That the matter here goes through the regulations.
The current administration has had several run-ins with Edesur. During the pandemic, the mayors have asked for the distributor’s concession to be cancelled. Then the controversy subsided. This was stated by the current owner of Enre, Walter Martello “The state can take over a distributor. But it has to there is a law, an administrative act, it does not come from nowhere,” he explained. “You also have to be careful not to cause a dispute in ICSID (the dispute resolution body of the World Bank),” she added.
“It is absolutely true that he raises the possibility of nationalization as an ombudsman. But now I am a regulator of electricity distributors that are under the orbit of the nation state,” he says.
“In the last 20, 18 years we have worked in an emergency regime. If we don’t change that reality and work to rebuild something planned for the future, we will always put out fires and we will always keep putting out fires, so we won’t have something sustainable. In 18 of the last 20 years we have had ENRE (the regulatory body) intervene”, explained Claudio Cunha, country manager of Enel Argentina in an interview last summer.
NS
Source: Clarin
