The dispute between oil companies and the biofuels sector (bioethanol and biodiesel) has grown over the years. Draft Law on the Bases and Starting Points for the Freedom of Argentines which is being discussed in the Plenary Commission of the Chamber of Deputies.
After knowing the main points of the changes made to the government’s original project, the first criticisms came from biofuel companies. Subsequently, the provinces where the companies are based (Santa Fe, Córdoba, Buenos Aires, Tucumán and Jujuy) took up the claims and put pressure on the Executive to make changes.
In this sense, the Minister of the Interior, Guillermo Francosand the Minister of Agriculture, Fernando Villellamet with representatives of the provinces last Monday and confirmed that they would make changes to the original text.
On Wednesday, the Minister of Energy, Eduardo Rodríguez Chirillo, presented in the Plenary Commission of the Chamber of Deputies a modification to the official project in line with the governors’ request. “We have updated the version the one included with the previous articles and which now, when they are presented, will be aligned with some comments received from governors and deputies in this regard, and has been presented to the version included in the original draft,” he noted.
As the official explained, cuts to both petrol and diesel are increasing. The proposal is that “the State releases” the price and in terms of cut “the mandatory cut of biodiesel is increased from 7% to 10%, and then increased to 15% until 2026”.
In bioethanol, he added, “it remains at 12% and then rises to 18% in three years, being able to then continue on a path up to 27%”.
In January, biofuel allocations made by the Ministry of Energy amounted to 114,621.9 million pesos ($71,293.8 million for biodiesel and $43,328.1 million for bioethanol).
Moreover, The original project allowed the import of biofuels. In the specific case of biodiesel, even integrated companies (multinational companies that export oil), non-integrated companies (SMEs) and oil companies could produce biofuels to supply the domestic market (today only SMEs can).
However, after the changes made by the Executive, Oil companies have the obligation to continue purchasing through tender where integrated companies on one side and non-integrated companies on the other participate.
“We want the existing quotas to be modified through tenders, which take various things into account. That no company can have more than 14% participation in internal demand, that no more than 100% of the installed capacity available to the participant can participate. And there must be a relationship between the production and the capacity of all the integrated ones, it must be the same as that of all the non-integrated ones. With this we will allow both small and large businesses to participate equally,” said Rodríguez Chirillo in his speech to deputies.
Furthermore, he indicated itand authorizes the participation of oil companies only when the 18% threshold is exceeded.
After learning of the changes to the original project, the Argentine Chamber of Energy (CADE) sent a letter to the Secretary of Energy criticizing such changes made to the original standard. “Our Chamber believes that the proposed regulatory framework is superior to the current one as it encourages competition, favors the promotion of better quality and innovation standards for the development of new biofuels, favors transparency mechanisms and indicates a path for all parties in the hydrocarbon value chain”, reads the letter sent to the official.
According to the text, “the regime of law 26.093, sanctioned in 2007, in a context of high international oil prices (it reached 100 dollars a barrel in November of the same year and reached 140 in June 2008), which was then replaced by law 27.640, which does not greatly modify the protection regimes established in the previous one, fixes prices, distributes quotas, prevents the entry of new competitors and new fuels into the market,” criticizes the body. Furthermore, the writing continues, ” It has a negative impact on the supply of liquid fuels due to the uncertain availability of bioethanol and biodiesel on offer.”
For oil tankers The current legislation generates a cartelized offer, with a captive market and a guaranteed price. “The consumer price ends up being higher, as the cost of biofuels is significantly higher than that of fossil fuels despite not being taxed on the fuel,” the business lamented.
“The scheme which has favored biofuel production for 15 years and has been postponed until the end of 2030, is to the detriment of local jobs and development in hydrocarbon-producing provinces, as well as having a direct impact on the tax revenues of those provinces oil companies … due to less oil activity,” they added.
Similarly, from the oil sector they argue that in the last four years the price of biodiesel has increased by 1.803%, while bioethanol from corn has increased by 1.315% and that from cane by 1.321%. “In this same period, the price of fuel at the pump has increased by half: the liter of diesel has increased by 851% and the liter of premium petrol has increased by 741%,” they clarified.
Criticism of German Di Bella
From the oil sector they have criticized the current Minister of Agriculture, Germán Di Bella, owner of Bioetanol Río Cuarto (Bio4) together with Manuel Ron.
According to oil industry sources, one of the big winners from the changes is Bioethanol Río Cuarto (Bio4), which is the creditor of 10.5% of the volume of bioethanol that the Ministry of Energy allocates month after month. It is the third most favored company among the 18 that the government chooses monthly among those that can sell their production on the local market.. Last December she was awarded a quota of 10,500 m3 of bioethanol that oil companies had to buy from her.
“Until the beginning of December, Di Bella was secretary of Economic Development of the Cordoban city of Río Cuarto, whose mayor is the Peronist Juan Manuel Llamosas. Llamosas is a staunch defender of the use of bioethanol. In fact, in 2017 he obtained the approval of the then Minister of Energy of the Nation, Juan José Aranguren, for the vehicles of his municipality to be refueled practically one hundred percent with bioethanol produced by Bioetanol Río Cuarto, Di Bella’s company,” they warned.
Source: Clarin
