/The Government fears a great energy “lockout” and prepares for the worst scenario
The Government fears a great energy “lockout” and prepares for the worst scenario

The Government fears a great energy “lockout” and prepares for the worst scenario

Officials related to the energy sector warn that scheduled power outages similar to those of the 1980s should not be ruled out

The Government’s recent decision to let public employees work from home from yesterday and this Friday and the request to companies to reduce energy consumption show that the energy situation may be more serious than what the government foresaw and has been aggravated by the heat wave. To this we must add the increase in the cost of energy in the world, which aggravates the situation. Some officials related to the energy area commented yesterday to the companies that as long as the situation continues, it will not be necessary to rule out planned power outages of the distribution companies similar to those of the 1980s. Unlike today, the service it was state owned by SEGBA. Since last Tuesday after the great blackout that affected a large part of the AMBA, the government has been negotiating with cameras business so that reduce your consumption of energy for the next few days. The talks are in charge of the technical teams in charge of the Secretary of Energy, Darío Martínez, and the Minister of Productive Development, Matías Kulfas. To begin to understand the energy problem, we must mention that one of the main problems is the delay in tariffs for consumers such as business users and large companies. But the other is the gap between international and local oil and gas prices. While a barrel of oil is worth approximately 85 dollars in the world, in Argentina it is sold at 55 dollars for the validity of the so-called Creole barrel. On the gas side, the international price of a million BTU is worth 5.8 dollars and here it is sold at 3.5 dollars.

The energy situation may be more serious than the government anticipated and has been aggravated by the heat wave

According to the forecasts of the National Meteorological Service, the heat wave will deepen until Saturday, so the demand for electricity will increase significantly throughout the country and in particular in the Metropolitan Area of ​​Buenos Aires (AMBA). Faced with this situation, the Government will carry out “preventive measures” to avoid blackouts, among which it will seek to agree with large industrial users on a reduction in consumption. For this reason, according to a document prepared by the team led by the Secretary of Energy, Dario Martínez, and the Minister of Productive Development, Matías Kulfas, together with those responsible for ENRE and ENARGAS and AYSA, the national government evaluates the CDC’s armed a Contingency Center (Security, Energy, Health, AYSA), to limit industrial demand during peak hours and a greater deployment of territorial containment actions . Among the measures proposed by this report, the one carried out through Decree 16/2022, published yesterday in the Official Gazette, which gives public employees a holiday from 12:00 noon today and tomorrow. In the text of the norm it was indicated that the objective was “to reduce the consumption of electrical energy and water”. From the Government they explain that the greater demand for energy is explained by the growth of the economy that leads industrial plants to use a greater amount of electricity. That is why the Executive is in dialogue with the main business chambers to seek a solution. “This scenario of growth in demand and temperatures puts the electricity system in an extremely demanding dispatch situation, higher than previous heat waves,” explains part of the document. The report also details that “we can say that there will be new records for energy and power demand (30% higher than the historical average), expecting for this last case, maximums greater than 28,500 MW per day, a mark that exceeds Tuesday’s record which was 27,234 MW Last Tuesday, more than 700,000 users in the AMBA were affected by power outages, when the temperature had reached 41 degrees, a record since the peak of 1996. The distribution companies of basic electricity and water services are in the midst of a complicated situation due to the latest supply cuts in the middle of the summer season, in addition to of asking for a strong update of their values ​​in more than 50% of the total price that arrives in the bill at the end of the month. “It is important to be clear about what is happening in the energy sector in order to understand the magnitude of the problem,” explains economist Damián Di Pace, who cites several problems. 1. In the case of electricity, the rate for an average consumption of 250 KWh, had a cost of about $900 pesos in the period from 2010 to 2021, that is, if we take for example the 2019 data, $2,041 was paid in average, while today in 2021 you are paying an average of $1,080 pesos, this means that the value of the rate is minimal. 2. In 2015, the value of the full (real) rate was approximately $1,194, but an average family only paid 15% of the value of the rate, that is, they paid $179 per month, so during the following years this was corrected. situation arriving until now where the electricity bill is paid $1,080, but this amount only covers 38% of the real value. 3. To maintain this scheme, it is necessary to allocate around u$s10,000 million dollars (subsidies earmarked for Cammesa, IEASA, etc.) Therefore, a family today would have to pay approximately $1,080 plus the 70% increase demanded by the companies, but for this not to happen, the State would cover the difference, thus achieving that only an increase of 10% in Buenos Aires and 6% in the interior of the country reaches the citizen’s pocket. “This situation exerts strong pressure on the companies distributors in the case of AMBA Edenor and Edesur and regarding electricity providers, which is becoming more and more unsustainable. The problem is with high inflation, costs will increase and companies will not be able to raise rates, because the State, through subsidies, will be the one to finance those increases. This implies greater pressure on the public sector, since it will have to resign resources from other urgent budget items to solve and maintain this scheme” explains Di Pace.

To maintain the current scheme, it is necessary to allocate around US$10,000 million in subsidies

As these resources are not enough, the state will continue to issue money to continue financing companies that provide these services, as is the case of CAMMESA, where the latest data shows that they had to transfer approximately 700,000 million pesos last year so that this company can continue to function. To understand the issue, it should be noted that the BCRA’s mega issuance of pesos in December was about 600,000 million pesos. From the Secretary of Energy they explain that the networks of Edenor and Edesur needed an immediate investment of 120 million dollars at the beginning of Alberto Fernández’s mandate to support the growth in demand and so far only about 25 million dollars have been invested and it has been the State before the refusal of the distributors to disburse those funds. They also explain that the networks of Edenor and Edesur remained obsolete to withstand the phenomenal increase in demand in recent years. Upon taking office, the current Secretary of Energy, Darío Martínez, set three urgent objectives. Firstly, to carry out the GasAR plan, secondly to build the Néstor Kirchner gas pipeline, and lastly to carry out the aforementioned works to update the electrical energy distribution system for the AMBA. They also explain that it is not a big project but a multiplicity of network modernization works and that it is necessary to go from a single-phase to a three-phase phase when the consumption of the home increases, or to put wider cables to support the necessary powers. . “Remote work for energy savings”, is the title of Decree 16/2022 published yesterday morning in the Official Gazette. The Executive Power argued that “the sustained economic reactivation” in various sectors during the course of 2021 “has resulted in a considerable increase in energy demand”, and added to the fact that “the summer season in the Argentine Republic has reported high temperatures due to to the increase of the same at the regional level, due to the direct incidence of the La Niña phenomenon, which affects a large part of the southern hemisphere of America”, the situation experienced this week in different parts of the country has occurred. On Wednesday, in an emergency meeting with President Alberto Fernández, together with the Chief of Staff, Juan Manzur, he analyzed the report of the National Risk Management System “the situation in the different regions in the face of the wave of high temperatures that is going through the country and the precautions that we are taking for the normal supply of water and electricity,” reported the President himself after the day in which around 700,000 users were without power.

Special request to companies

“From our government, as indicated by President Alberto Fernández, a deep and detailed dialogue is being carried out with conglomerates of companies so that this decrease in the use of electricity during these days is carried out,” a source close to those technical teams told iProfesional. . The official also added that “due to the peak in energy demand from industrial activity, plus the heat wave, we are at a “historic peak in demand, that is why we ask for the accompaniment of the industry, during peak hours it will be noticeable“. That time would be between 13 and 16 yesterday and tomorrow that is why we are carrying out a deep and detailed dialogue with conglomerates of companies so that this decrease in the use of the electricity during these days is carried out.

The Government asked companies to moderate the use of electricity these days

The business executives consulted belong to the UIA (Argentine Industrial Union), with the UIPBA (Industrial Union of the Province of Buenos Aires), with the IPA (Argentine SME Industrial), with Came (Argentine Confederation of Medium-sized Enterprises), with the Clothing Textile Chain, with the Timber Federation, the Chamber of the Plastics Industry, the Chamber of Footwear and Adimra (Association of Metallurgical Industrialists of the Argentine Republic). Meanwhile, the energy distribution, generation and transportation companies are preparing for difficult days. The explanation from different government sources is that of the 28,000 MW of demand that there are, 10,000 MW correspond to the large users and the big enterprises. Therefore, from the government they maintain that a reduction in that sector is really what is going to help the system to function and to be able to meet the demand, beyond contingencies that may occur. For his part, the Secretary of Energy Darío Martínez explained that “the growth in demand from industrial activity plus the heat wave is a historical peak in demand, that is why we ask for the accompaniment of the industry, during peak hours it will be noticed We project a peak of 28,550 megabytes for today, an all-time record.The system is working at full capacity and that is why we ask large users to reduce energy demand. These very strong peaks in demand this week.The talks with companies are added to a decree published today that ordered that public employees not attend offices and perform their tasks remotely. The measure will govern today and tomorrow from noon a system similar to the one that governed during the pandemic. The Government finalizes the details of the decree to convene extraordinary sessions. As it transpired on Monday, they will be enabled as of January 20 and, among their priorities, the much-announced Multiannual Plan, which Alberto Fernández had promised to send on December 6, does not appear. It would not be strange for those sessions to deal with issues related to energy consumption that bring some surprise to the distribution companies. Although it is likely that the Executive Power will focus on a package of initiatives that seek to reactivate the economy, generate employment and attract foreign currency, in addition to the reform of the Council of the Judiciary, new developments in the energy issue should not be ruled out.

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