Govt. approves US$50.7mn Cammesa loan

Argentina's government has authorized a 150mn peso (US$50.7mn) loan for wholesale electric market management company Cammesa to avoid rate increases due to seasonal variations in generating costs, newspaper La Nacion reported. The government published the decree in its official newspaper on December 5. "This financial help is an exceptional political decision that considers the emergency social context and the need to prevent any rise in inflation, avoiding the seasonal increase in rates," the decree said. The loan "will help mitigate [Cammesa's] debt and mitigate the demands of the private sector," a spokesperson at electricity regulator Enre told BNamericas. "This is a good sign because until now the government did not want to sign this decree or hand over this money," the spokesperson said, adding that the loan has been pending approval since May. Before the January 2002 rates freeze, seasonal price variations were designed to compensate electricity generators and gas producers for higher costs in winter months, when thermoelectric generators are required to produce more power. In the absence of those seasonal variations, former President Eduardo Duhalde's administration set up a stabilization fund held by Cammesa to subsidize generators for liquid fuel purchases. However, the fund dried up and Cammesa ran up a 400mn peso debt with generators because, according to the emergency economic law, seasonal rate increases cannot be passed on to consumers. This new loan will be paid to Cammesa during 2004, at an interest rate set by the Central Bank, and will be used to cover part of that 400mn peso debt. Part of the funds for the loan will come from the government's bi-national hydroelectric projects Yacyreta and Salto Grande with Paraguay and Uruguay respectively, the spokesperson said. Discussions about gradual rate increases for industrial and commercial consumers will likely be postponed until January because of vacations and other interruptions over the holiday season, the spokesperson added.