Edelap To Invest ARS300 Million In Argentina Power Distribution Grid
December 15 2008 - 11:05AM
Dow Jones News
Argentine power company Edelap, which is controlled by
U.S.-based AES Corp. (AES), plans to invest ARS300 million ($87
million) to improve and expand its distribution network.
The investment program, which was announced late Sunday, comes
about a week after Argentina's electricity regular, ENRE, filed
charges against Edelap in a federal criminal court, accusing it of
"irregular" accounting practices.
ENRE said "grave" accounting practices had benefited AES while
leaving Edelap without enough money to improve its distribution
network.
In a statement issued late Sunday, Edelap said that after
meeting with government officials, AES decided to revise its
investment plan.
"The plan aims to improve the quality of service, the growth of
installed high-tension capacity to supply the region and create new
direct and indirect jobs," Edelap said. "This electric plan will be
developed in agreement with ENRE, municipal authorities, and will
keep the community permanently informed of its advances."
Edelap said it spent six months looking at ways to improve power
distribution after a constant increase in demand. The company said
it has reconsidered its "current configuration and has come up with
the present plan."
The plan entails the construction of three sub-power stations,
the amplification of three others, extending the grid by 700
kilometers (440 miles), and the modernization of 190 medium and
high-tension power transformers, Edelap said.
Edelap also will boost its call-center capacity so it can better
deal with consumers affected by power outages.
Last week Edelap issued a detailed denial of ENRE's charges and
said its accounting practices are transparent and adhere to
Argentine law and the most respected norms.
Edelap also said its actions have improved its local financing
situation.
Until recently, power rates in Argentina were frozen since 2001.
Energy analysts say this rate freeze made it hard for utility
companies to make money and discouraged them from investing in
production and distribution capacity.
A few months ago, the government has began letting rates rise
for residential and commercial customers, but analysts say the new
rate are insufficient to spur major investment.
Officials at Argentina's power distribution companies say they
are hopeful - but not certain - that the government will raise
rates again in February.
Last week local media reported that the government would only
raise rates for those companies that have announced new investment
plans.
-By Taos Turner, Dow Jones Newswires; 5411-4590-2421;
taos.turner@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front
page of today's most important business and market news, analysis
and commentary. You can use this link on the day this article is
published and the following day.