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Argentina has had power outages in the summer since I was 10... that's well over 20 years now...
The lack of investment in infrastructure on that area is well do ented...
By Taos Turner
Of DOW JONES NEWSWIRES
BUENOS AIRES (Dow Jones)--Despite a recent heat wave and fears of a widespread crisis, Argentina's power grid has held up in much of the country and met rising demand while avoiding the blackouts that have plagued Argentina in recent years.
On a hot day last week, heavy demand pushed the grid to deliver a record level of power, Planning Minister Julio De Vido told reporters.
The energy czar said the records show that the state's interventionist policies have served the country well.
But critics said De Vido failed to acknowledge that power outages occur daily and that the national grid is often on the verge of collapse.
"Prepare yourself for blackouts," said Carlos Pierro, an energy consultant who once ran YPF (YPF, YPFD.BA), the local unit of Spain's REPSOL (REP, REP.MC). "The sector is worse off than a year ago. While generation capacity is greater because of very expensive government intervention, there's been little improvement in distribution or in transformers. The system can't keep up with new demand."
This has caused major blackouts in Cordoba, Corrientes, Chaco and Santa Fe provinces, Pierro said. Much smaller blackouts hit parts of Greater Buenos Aires every day.
At Osaka, a popular restaurant in the trendy Buenos Aires neighborhood of Palermo, a waitress said Thursday that the restaurant had lost power the previous night.
"That's why the chef couldn't prepare our exquisite Chocolate Volcano dessert," she said. "The whole city block was dark. It happens frequently."
Such blackouts are routine during peak demand moments. But they're nothing compared with what's happening in the city of Cordoba. Residents there face three hours of scheduled blackouts twice a day, every day. Since a transformer broke on Jan. 25, the city's power supply has been cut by 25%, according to the provincial power company, EPEC.
It isn't the national government's fault that Cordoba's transformer broke, said Cecilia Laclau, an analyst the energy think tank Fundelec. But the incident is indicative of broader structural problems - including aging and overused equipment - that persist because of state policies that stifle investment, she said.
"The current energy system is maladapted to current realities," Laclau said.
De Vido has held up the government's $20 billion National Energy Plan, saying it's the most ambitious energy program in 50 years. He has also touted public investment in new generators and 500-kilowatt transport lines.
"We not only have enough energy but we have important reserve levels," he said last week. Even on last week's hottest day, Argentina used just 85% of its installed capacity, he said.
But energy industry leaders and former government officials almost unanimously criticize De Vido's policies, especially price controls and export taxes.
Those policies, they say, have kept local electric rates among the lowest in the world even as demand has jumped on average by 6% annually since 2003.
While energy prices have soared around the world, they've shifted little in Argentina. The government cracked down on prices following the country's 2001-2002 economic meltdown. That has discouraged private sector investment in generation, transportation and distribution.
The state has partly filled that gap by investing its own funds in generation and transport.
"One of the only things the state has done well was has been to build transport lines," Laclau said.
Repeated attempts to contact Planning Ministry officials for comment were unsuccessful.
Pierro said Argentina was lucky in January.
Many factories suspended operations because of scheduled summer vacations. But now that the main vacation period is over, and the economy appears to be growing again, demand seems set to rise.
If temperatures rise too, there could be more trouble.
"In the interior of the country, it's been a disaster," said an official at one of Argentina's biggest power companies. "Electricity rates haven't gone up enough to encourage investment and the situation won't improve until that happens."
Argentina has had power outages in the summer since I was 10... that's well over 20 years now...
The lack of investment in infrastructure on that area is well do ented...
Hey, De Vido went to Venezuela to advise them mofo's about how to keep an electric grid system in tip top shape!
Let's see, Wall St will finance grid investment (using cheap money from the US Fed but high rates to risky Argentina, a spread Wall St loves), but only if US companies get the general contracts (the same companies invested in/controlled by Wall St). Disaster capitalism.
You have to be an unhappy guy living among those American capitalist pigsLet's see, Wall St will finance grid investment (using cheap money from the US Fed but high rates to risky Argentina, a spread Wall St loves), but only if US companies get the general contracts (the same companies invested in/controlled by Wall St). Disaster capitalism.
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