The letter, which Infobae agreed exclusively, is a real bomb within hours of the closure of the agreement with the IMF and in the midst of a very volatile global context for energy commodities following Russia's invasion of Ukraine.
It basically says that Argentina ran out of resources to pay for gas in March. This gas supply will also affect the generation of electricity. That is, when winter is still three months away, the season of greatest consumption of a resource crossed by the discussion of tariffs and subsidies of the agreement with the Monetary Fund and the invasion of Ukraine, the country can no longer provide them.
The official document is dated March 15 and addressed to the Minister of Economy, Martín Guzmán, with a copy to the Chief of Staff, Juan Manzur, and President Alberto Fernández. It bears the signature of Darío Martínez, Secretary of Energy and Guzman's junior, at least in the organization chart.
“In the exercise of my duties as Secretary of Energy, aware of the needs that must be met during the current month to maintain essential basic services and critical activities related to my area, I hereby reject the cut imposed by the Cash Roofs, warning of the consequences disastrous for the country that this implies,” Martinez said.
According to Energía, Guzmán applied to his monthly budget what is known as the Cash Roof and instead of drawing $309,802 million in March, as requested, he sent him $66,015 million, 21% of what was requested.
“These cash adjustments have been happening, but not in this violent and explicit way. This monetary squeeze puts the system in crisis before winter and breaks the chain of payment and supply. It is a real sector crisis that affects all fronts of the energy sector. They are already implementing the agreement with the IMF, or the meaning of all this is not understood. It is an immediate impact: you cannot import more diesel and LNG, or pay generators,” official sources said.
“There is no intern here that is worth it. Either it's the Fund or it's a somewhat strange plan of the minister. There is no explanation for what he is doing,” they described from one of the official offices. The tension between Guzmán and sector officials close to Cristina Kirchner is not new: recalled is the incident last year in which the minister unsuccessfully tried to remove the Undersecretary of Electric Energy, Federico Basualdo.
Martínez assures in this official document of the Argentine State that the budget allocated for his organization is not enough at all, “since they do not meet the basic requirements of the area and whose implementation will have immediate damaging consequences for the country.”
“Consider that the $66,015 million of the above-mentioned ceiling would not even cover the payment of the Gas that we imported from Bolivia, the LNG LNG tanker that IEASA acquired to cover the lack of Gas that temporarily causes a technical shutdown of a planned treatment plant, and the 17 Gas Oíl ships that CAMMESA contracted for supply the Thermal Power Plants and their deposits, which are at minimum levels, all ships that will enter port during March; leaving all the rest absolutely unfunded the obligations of the Ministry of Energy,” the document states.
If the funds do not arrive, Energía describes a scenario that will be devastating: direct and immediate impact on the social tariff of gas and electricity paid by those most in need, arrears of all kinds and non-compliance with payments to private producers with an impact on investments and possible lawsuits. The Néstor Kirchner gas pipeline, a “work that was publicly announced by the National Government as the appropriate and necessary solution to increase domestic natural gas production from Vaca Muerta, which has been reiterated as a fundamental milestone in the context of CERA Week in Houston (US),” according to Martinez.
It enumerates it as follows:
- “It will not be possible to pay for the LNG and Gas Oil Shipments, which were contracted to arrive in the country during the current month and which IEASA and CAMMESA respectively must attend in dollars, in advance.”
- “A crisis will ensue due to lack of fuel to power the country's thermal power plants”.
- “We will not be able to make the payment in dollars demanded by the provision of Gas Boliviano, right in the middle of the negotiations where we are trying to increase the volumes we receive through that route.”
- “Payments may not be made to Natural Gas suppliers arising from obligations assumed by the National State within the framework of the Gas.Ar Plan and previous incentive plans. These obligations were partly breached in February of this year, to which those for March would now be added. These payments to Gas Producers, which are guaranteed by Tax Credit Certificates, objectively constitute the financial flow that these companies use to execute the investments necessary to produce and deliver the Gas required by our residential, industrial and power plants demand thermal energy to produce electrical energy. If production were to suffer due to a decrease in investment required, as a result of the cut in financial flows, there could begin to be a lack of supply.
In addition to the factual problem that this represents, the doors are opened to judicial claims for delays and non-compliance with the obligations assumed by the National State under the Gas.Ar Plan and its precedents, just at a time when full production of the national fluid is required to limit the import of LNG given to the minimum possible the uncontrolled international prices of this product, which, energy crisis and war in Ukraine through, have risen 400/500% in relation to those paid last year.”
- “Funds may not be transferred to Anses to meet the Home Program that reduces the cost of bottled gas to sectors with lower resources.”
- “Funds destined to maintain the Social Rate for Natural Gas may not be transferred.”
- “The transfer of funds to IEASA of $58 billion will be delayed for another month, corresponding to financing of the first phase of the works of the Transport.Ar Producción Nacional gas pipeline system, which has already begun with the tender for the acquisition of pipes for the Presidente Néstor Kirchner gas pipeline by March 31, 2022.”
Critics of Guzmán say that Economía has not yet transferred the funds that were raised for the sector in the so-called Wealth Tax. “From USD 600 million, only USD 100 million came to IEASA,” they argue with reference to Energy Integration Sociedad Anónima, the former Enarsa, responsible for, for example, building the Kirchner gas pipeline.
They also claim that the minister negotiated contracts with Bolivia downwards for January and February of this year — when 9 million cubic meters of gas were needed and 7 million came — and they fear what could happen to what will be agreed for the rest of the year, a discussion that begins now. “It will take 12 million cubic meters during the winter. If that does not happen, the need of the north of the country cannot be guaranteed, something that in addition to industry could affect residential provision. Let's hope it will be better negotiated this time,” they say near Guzmán's office.
The full letter:
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