Gradual removal of tariff subsidies, less taxes for exporting hydrocarbons and increases in fuel prices at the pumps. These are some of the main guidelines that Eduardo Rodríguez Chirillo, the future Secretary of Energy in the government of Javier Milei, who was confirmed in office by the Office of the President-Elect, will seek to promote as of December 10.
Chirillo is an expert on privatization who was advising Milei during the campaign.
The UCA lawyer worked in the Ministry of Energy, headed by Carlos Bastos, in the first government of Carlos Menem, when the State reform, deregulation and privatization were executed. He was also an advisor to the Ministry of Infrastructure and Housing in 2001.
Based in Spain for 20 years, Chirillo was hired to develop a plan for Milei that he will carry out himself from December. Energy is an area that will no longer depend on the Ministry of Economy and will move to the Ministry of Infrastructure, under the premise of stimulating private investment and the "rationalization of the State".
One of its tasks will be the restructuring of utility contracts and the phasing out of energy subsidies. The former manager of energy firms proposes to move towards a scheme of direct subsidies to "vulnerable" sectors, a criterion that was implemented by the administration of Mauricio Macri and is well regarded by the IMF.
— Office of President Javier Milei (@OPEArg) November 28, 2023
Milei proposes that taxes can be eliminated for energy distributors to recompose their revenues and that the adjustment be paid by the State, without an increase in rates. But, according to the consultant, it will also be necessary to re-establish the comprehensive tariff review (RTI) of the distributors, with future increases.
The outgoing government implemented a progressive segmentation of subsidies by income level. The reduction implied an increase in the bills paid by consumers, but it was frozen after the PASO. For Chirillo, the sector has to cover its costs and rates must be "updated for inflation."
As for hydrocarbons, the idea is to allow domestic price increases to narrow the gap with the export price, transitioning with measures that stabilize the macroeconomy or a "price path" and the creation of a stabilization fund to neutralize price volatility.
It is also proposed to eliminate export duties and import tariffs on crude oil and fuels and to promote medium-term contracts between non-integrated producers and refineries in the domestic market, neutralizing their right to block exports.
With a consulting firm in Spain, from where he advises the Inter-American Development Bank (IDB), the future energy secretary believes that the wholesale administrator of the electricity market, CAMMESA, should return to its original role and stop buying fuel for generators.