Tuesday, June 18, 2024

ECONOMY | 21-03-2023 11:10

Argentina’s government intervenes in Edesur power firm after repeated blackouts

Responding to repeated blackouts and citizen anger, Argentina’s government intervenes in the running of Edesur power firm; Economy Minister Sergio Massa imposes Jorge Ferraresi as trustee for 180 days.

Responding to public anger and repeated power cuts, Economy Minister Sergio Massa on Monday night imposed a 180-day state administrative trusteeship on Edesur electricity distribution company.

Massa said that Avellaneda Mayor Jorge Ferraresi (Housing minister until last October) would be imposed as “transitory” trustee for six months by the ENRE energy regulator  to ensure the firm complies with the responsibilities outlined in its concession.

"Situations such as those which thousands of Argentines have had to endure in the last 15 days can no longer be tolerated," said Massa in a press release.

"We have instructed the ENRE [Ente Nacional de Regulación de la Electricidad watchdogs] to proceed with a trusteeship of 180 days over the company Edesur for the purpose of monitoring compliance with the works and, above all, the improvement in the service that the company should have," said the minister.

"We want to make it clear that the ownership of the shareholders is not affected; that the concession contract is not affected, but that the state will carry out, through the trusteeship, the effective supervision of the fulfilment of the contract," he warned.

The intervention is "of a transitory and exceptional nature and is the result of Edesur's deficient actions in terms of service compliance," said Massa.


Repeated blackouts

The decision comes after repeated blackouts across the Buenos Aires metropolitan area. Last week, in the midst of the ninth heatwave of the summer, with temperatures soaring above 30 degrees even at night, tens of thousands of homes and businesses suffered power cuts of several hours and up to several days, most of them Edesur customers.

Angry residents in the south of the capital – the area most affected by the cuts – marched on the firm’s offices in Parque Avellaneda, with some demonstrators vandalising property and setting tyres alight on the streets outside.

Edesur, owned by Italian firm Edel (which is in the process of selling out), supplies hundreds of thousands of homes with electricity. Since the privatisation of the service in 1992, which granted a 95-year concession, Edesur has divided electricity supply service to the capital and its periphery – an area home to some 15 million Argentines – with Edenor, a firm currently in the hands of the Argentine group Vila-Manzano, which covers the northern half .

In the press release, Massa pointed out that "since February 13, when 180,000 users were left without service, there has been a repeated interruption of supply in medium and low voltage, which represents a clear and systematic failure" of the service.



In February, Edesur was fined one billion pesos for the repeated power outages and Massa said on Monday the firm would also be penalised a further 2.7 billion pesos (US$12.8 million at today's exchange rate) of funds which will be used to reimburse service users who suffered outages.

"Last week a criminal lawsuit was filed for abandonment of persons and fraudulent administration, and the directors who run the company were banned from leaving the country," he added, referring to a government denunciation alleging “the crimes of defrauding agreed rights, abandoning people and hindering public services." 

"Over the last 15 days we have experienced situations which have shocked and hurt us all," said Massa, such as "seeing shops having to throw away their goods, homes without electricity and water due to the lack of electricity throughout the length and breadth of Edesur's concession area.”

Ferraresi will now take charge for six months, overseeing the company and its investment plans.

"This intervention will have the task of supervising, controlling and monitoring the execution of the service works," confirmed Massa.

Ferraresi was mayor of Avellaneda from 2009 to 2020, before requesting leave and moving to the National Territorial Development & Habitat (Housing) Ministry. He resigned in 2022 to return to Avellaneda. He is seen as close to Vice-President Cristina Fernández de Kirchner.

Early Tuesday, government officials briefed reporters that Ferraresi would have “no operational capacity,” but would be “supervising and authorising expenses." The government’s main objective is to speed up investments in infrastructure needed to maintain the service.

It also emerged that the Buenos Aires City and Province governments will be invited to send a representative to join Ferraresi’s team overseeing Edesur.



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