Javier Milei is running for Energy State, but he doesn’t pay subsidies and imports are complicated

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Minutes after announcing his dismissal, the operator was asked: “How are exports done?”. Bitterly, the technician laughed and left without explaining what his highly skilled job consisted of.

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The Government has closed a key area for regulating the electricity system, laying off its employees and seek to know how energy imports and exports work. The measure was adopted as a preliminary step to deregulation of the market, so that it works again like it did in the 1990s.

According to industry specialists, the rush to implement this change, without a solid and global plan behind it, could complicate the operation of the system. For example, the Wholesale Electricity Market Management Company (Cammesa) Make scheduled energy imports in response to peaks in demand and take advantage of deals when neighboring countries export with cheap excess electricity available.

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This would not be possible without this area. On the other hand, Argentina would have to put into operation more expensive thermal power plants for the system, with the consequent consequences increase in average costs and the need to transfer it to families in their own rates or to the State, through subsidies.

What is Cammesa used for?

This week, two advisors from the Ministry of Energy, Carlos Morales and Mariano Palaciosshowed up at the Cammesa e offices They dissolved the Contracts department, firing 9 employees.

He sector, of a purely technical nature and far from politicsit worked like that Intermediary between producers and the Dispatching Agency (OED), which technically and economically regulates the Wholesale Electricity Market (MEM) and the Argentine Interconnection System (SADI). This has been confirmed Clarion various sources, but the government has denied it.

In the electricity system, generators sell their energy to Cammesa, which mediates the entire cost and resells it equally to distributors, to reach, at the end of the chain, homes, industries and businesses. It works like this except in the case of Large Users, who privately contract out their supply, such as that of renewable energy.

Cammesa’s Contract Management puts in a “bag” the plants that produce at 500 dollars per megawatt hour (MWh) and the hydroelectric dams that are paid 20 dollars. Without an overall change in regulation, it could happen that a distributor in Buenos Aires is awarded the most expensive contract and the tariffs have to be multiplied several times, while in Santa Cruz – for example – they drop significantly.

This market regulation scheme would only work well with a healthy system and with all users paying the real cost of energy with their tariffs.an idea towards which the Government is tending but which is still far from being realised.

The energy payment chain

Today there is a virtual interrupt the payment chain of the electricity sector, after the devaluation in December. Generators like it Pampa Energía, Central Puerto, YPF Luz, Enel, Albanesi and Genneia -among others- they get their funds through Cammesa after payment by distributors (instead of end users) and the National Treasury, which provides the difference with the subsidies.

But Distributors racked up $483.5 billion in debt through mid-February by not paying for economic transactions, as a form of withhold money to finance salary payments, taxes, spare parts and essential maintenance. Given the lack of tariffs that reflect the costs – they say in the sector – Energy companies don’t pay for the energy they sell.

At the other end of the table, the Minister of Economy, Luis Caputo, sitting at the State Treasury to demonstrate that Javier Milei’s government achieved a financial surplus (more revenue than expenditure even after paying interest on the debt). In January, almost $500,000 million remained unpaid, or the equivalent of the entire surplus which he celebrated and presented to the International Monetary Fund (IMF).

According to market sources, electricity transporters, such as e.g Transener, they collected 25% of the November deal, which they were supposed to receive in full on January 10th. Until now, With 50 days of delay, some companies charged only half the corresponding amountand they claim that this is the case payment of wages at risk.

The general secretary of the Luz y Fuerza union, Guillermo Moser, confirmed to Clarion that these days salaries are regularized and that established a parity of 15%..

The situation also affects oil companies that sell gas to Cammesa for energy production. “The debt accumulated by the Treasury towards companies is arriving $850,000 million. 2 months after its expiration, the loudest crying begins“competent sources in the sector told the newspaper.

Source: Clarin

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