Argentina intervenes Edesur, the electricity distributor controlled by the Italian Enel

Neighbors of the Villa Crespo neighborhood, in the city of Buenos Aires, protest after eight days without electricity, on March 17, 2023.AGUSTIN MARCARIAN (REUTERS)

The Government of Argentina announced on Monday the administrative intervention for 180 days of Edesur, the electricity distributor controlled by the Italian company Enel.

Economy Minister Sergio Massa said the move is a response to service outages that have affected thousands of users over the past two weeks amid a record-breaking heat wave.

Edesur has 2.7 million clients in the city of Buenos Aires and part of its suburbs.

The intervention does not affect the concession contract, in force until 2092, nor the control of operations, but will be limited to state monitoring of the investment plan and the provision of the service.

Going further would have enabled Edesur to denounce Argentina before the ICSID international court.

"Using the powers that the law assigns us, we have instructed the Enre [National Electricity Regulatory Entity] to intervene in the company for 180 days to certify compliance with the works that it has to do," Massa said at a press conference. .

“See shops having to throw away merchandise;

homes without electricity and without water were the images that marked the agenda of the last fifteen days in Argentina, especially Amba”, as the metropolitan region of Buenos Aires is known, he pointed out.

In charge of the intervention will be the former Minister of Territorial Development of the current Administration, Jorge Ferraresi, an engineer close to the vice president, Cristina Kirchner.

Enel has already anticipated its decision to sell its stake in Edesur, after years of disputes in a market in which it has presented negative balances in four of the last six years.

According to the company, the official policy of frozen rates, which the State compensates with million-dollar subsidies, has prevented it from complying with the necessary investments to guarantee the quality of the service.

Power cuts are recurring in the summer months due to the skyrocketing demand for electricity.

This year's has been the worst heat wave since records have been kept, 117 years ago, with temperatures up to 40 degrees until the gates of autumn.

The intervention is a government response to the blockades and street protests carried out by hundreds of residents without electricity in the capital.

The social bad mood is not good news for the Casa Rosada, which must also deal with inflation above 100% year-on-year.

In addition to submitting to the discretion of the State, Edesur must return to the users affected by the blackouts the equivalent of 13 million dollars already collected in the bills to the homes.

Massa recalled that last week, at the worst moment of the heat wave, the State denounced the company for abandonment of person and fraudulent administration.

Enel announced the sale of 51% of the shares starting in April.

And he maintains that he has not breached the service.

In a recent interview with the newspaper

the director of Enel Latin America, Maurizio Bezzeccheri, said that the Argentine Ministry of Economy was within its right to take away the concession.

“But you will have to argue why you removed it with an independent analysis, which the parties can request, that is national and international in nature and that practically verifies if everything that had to be done was done,” he said, “if you think that the sale of Enel is an argument for why attacking Edesur would be a problem that Edesur does not have, but that the country does”.

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