Argentina To Pay Back Some Debt Owed To Power Distributors
June 10 2009 - 4:20PM
Dow Jones News
The Argentine government and the Province of Buenos Aires have
agreed to pay around 60 million pesos ($15.9 million) in debt owed
to three major power distributors, company officials said
Wednesday.
The debt is related to an agreement between the governments and
the distributors - Edenor, Edesur and Edelap - to provide
electricity to hundreds of thousands of people living in
shantytowns in and around the City of Buenos Aires.
The agreement, which has been renewed periodically since 1994,
aims to provide poor residents with access to subsidized power. But
during Argentina's 2001-2002 economic crisis, the national and
provincial governments began failing to meet their payment
obligations to the companies.
Officials from the companies, who asked for anonymity, say the
payment decision is positive.
"We shouldn't interpret this as an inflection point but neither
should we dismiss it as insignificant," said one official.
An official at another distributor said the payment represents
the "normalization of a legal agreement" while denying that it
means the government is set to change its prickly relationship with
the sector.
Power distributors and other utility companies have long urged
the government to allow them to raise utility prices to bring them
in line with market prices.
But with a few exceptions, the government hasn't budged, arguing
that energy prices need to be kept low to help boost economic
growth and ease costs for lower-income families.
For the most part, electricity prices have been frozen since at
least 2002.
Edenor's 2008 annual report indicates the government owed the
company around ARS49 million as of the end of 2008, suggesting the
ARS60 million payment won't be enough to cover all debt with the
sector.
-By Taos Turner, Dow Jones Newswires; 5411-4103-6728;
taos.turner@dowjones.com