The Government of Javier Milei is moving towards a new wave of privatizations in Argentina, with the opening of various processes for the State to sell or concession assets in various key economic sectors.
“Everything that can be privatized, will be privatized. “Everything that can happen to the private sector to make it more efficient, that’s how it will be done,” said presidential spokesperson Manuel Adorni this Wednesday when announcing the Executive’s decision to privatize the company Belgrano Cargas y Logística, which operates three transport lines. of rail freight.
These railway lines were handed over to private capital in 1999, at the end of the Government of Peronist Carlos Menem (1989-1999), architect of the last great wave of privatization that Argentina experienced.
The list of Milei privatizations
Belgrano Cargas, which returned to the State in 2008 due to problems with the concession, is one of the many companies that the Milei Government seeks to privatize.
Shortly after assuming the Argentine Presidency last December, Milei included 41 state companies as “subject to privatization” within an ambitious economic deregulation bill, a list that was later reduced to six companies as part of negotiations with the opposition to carry out the norm.
Included in that limited list were Energía Argentina (with assets in the electricity and transportation sectors and gas marketing); Intercargo (airport services to airlines); Argentine Water and Sanitation (Aysa, drinking water and sewage services); Belgrano Cargas; Railway Operating Company (Sofse, passenger trains); and Road Corridors (toll roads and highways).
Other companies to pass hands
The new law also makes it possible for private capital to enter Nucleoeléctrica Argentina (NASA, operator of nuclear power plants) and Yacimientos Carboniferos Río Turbio (YCRT, operator of a coal mine in the south of the country), although in both cases the national State remains obliged to maintain a majority shareholding.
Of all this group of companies, in addition to Belgrano Catrgas, the Government has already announced that it will put out to tender the Road Corridors roads so that they can be managed by private companies.
Weeks ago, it also announced that it will call for competition to grant concessions for the operation of four hydroelectric plants whose contracts with private companies have already expired.
Likewise, it launched the process to sell the national State’s participation (63.7%) in the firm Industrias Metalúrgicas Pescarmona (Impsa) and plans to launch in the coming months the tender for the concession of the waterway of the Paraná and Paraguay rivers. , key for the departure of cargo ships from several countries to the Atlantic.
Another company that could return to private hands is Aerolíneas Argentinas, the largest airline company in the country, whose privatization has been promoted by some sectors of the opposition that presented two bills for this purpose in Parliament, initiatives that the ruling party supports. emphatically.
Shrink the State
Many other companies are in the sights of the Government, which maintains strict adjustment policies in public accounts, which implies, among other things, shrinking the State, either by reducing government and administrative structures, or by of privatizations.
In the latter case, furthermore, the sales of companies or the signing of concession contracts will provide fresh funds to the coffers of a Treasury that, no matter what, needs to increase its income in the logic of the ‘zero deficit’ that Milei defends staunchly. .
“All State companies are going to open up to private capital and will undergo procedures to restrict and completely end state participation in them,” said the head of the Public Companies Transformation Agency, Diego Chaher, this Wednesday when announcing together with Adorni the decision to privatize Belgrano Cargas.
According to official data, 100,263 people work in the nearly 45 companies and societies of the State, about 10,000 fewer since the Milei Government began.
The unions that represent workers in companies subject to privatization have already expressed their refusal to this process on several occasions.
Argentina / EFE
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Interview with Economic Analyst Dr. Laura Villar on Argentina’s Privatization Strategy Under Javier Milei
Editor: Thank you for joining us today, Dr. Villar. The Argentine government under President Javier Milei is moving toward a significant wave of privatizations. Can you give us an overview of his administration’s approach to privatizing state assets?
Dr. Villar: Thank you for having me. Yes, Javier Milei’s government is indeed embarking on an extensive privatization plan. The administration’s stance, as articulated by spokesperson Manuel Adorni, is quite clear: “everything that can be privatized will be privatized.” This includes a range of sectors, notably transportation and energy, with the aim of increasing efficiency and operational effectiveness through private sector involvement.
Editor: The initial list included 41 state companies, which was then reduced to six after negotiations. What can we expect from this narrower list regarding potential impact on services and employment?
Dr. Villar: The companies on the list, which include major entities like Energía Argentina and the railway operator Sofse, are crucial to various sectors of the economy. The reduction was likely influenced by political negotiations to ensure that the reforms could pass. While privatization can lead to improved efficiency, there are concerns about job security and potential service quality reductions. Privatization often prioritizes profit over public service, which can lead to increased costs for consumers.
Editor: The government has already announced the privatization of Belgrano Cargas and is looking to manage road corridors and hydroelectric plants with private companies. How do you view the timing of these moves?
Dr. Villar: The timing seems strategic, as Milei’s presidency began at a time when Argentina was grappling with economic challenges, including high inflation and public debt. By hastily moving toward privatization, the government is likely aiming to quickly inject capital into the economy and reduce the fiscal burden of maintaining these enterprises. However, the risk here is that rushing these processes may overlook the thorough assessments needed to ensure that privatization serves the public interest.
Editor: There is mention of maintaining state ownership in certain areas, such as Nucleoeléctrica Argentina and YCRT, despite allowing private capital. What implications does this have for national interests?
Dr. Villar: Retaining a majority stake in essential services like nuclear power and coal mining is a mixed approach. It allows the government to potentially safeguard national interests while still tapping into private investment. However, it could lead to complications in terms of governance and oversight. Balancing public ownership with private efficiency is tricky and requires careful regulation to prevent conflicts of interest or profit-driven priorities from undermining public welfare.
Editor: what should citizens keep in mind as these privatization plans unfold?
Dr. Villar: Citizens should remain vigilant and informed about these changes. It’s essential to engage in the public discourse surrounding privatizations. They must ask critical questions about how these decisions will impact service accessibility, job security, and pricing. Moreover, there should be transparency in the processes to ensure that privatization doesn’t merely translate to a transfer of wealth from public to private entities without accountability.
Editor: Thank you, Dr. Villar, for your insights. It will be interesting to see how these privatization efforts unfold under Javier Milei’s government.
Dr. Villar: Thank you for having me, and I look forward to discussing the outcomes as they develop.
Majority stake in key operations like Nucleoeléctrica Argentina and YCRT reflects a balancing act by the Milei government. It suggests an acknowledgment of the strategic importance of these sectors, including energy and natural resources, where national security and public welfare are at stake. This mixed approach could be a way to attract private investment while still ensuring that the government retains some control. However, it raises questions about the effectiveness of oversight and whether private firms would prioritize national interests over profit. It’s crucial that proper regulatory frameworks are implemented to ensure public benefit remains a priority.
Editor: Unions have expressed their opposition to this privatization wave, particularly with fears of job losses. How do you foresee the government managing potential backlash from labor groups?
Dr. Villar: Labor unions in Argentina are historically powerful and have a strong record of activism. The government’s commitment to privatization could indeed trigger significant opposition and protests. To mitigate backlash, the administration might need to engage in dialogue with unions, possibly offering retraining programs or transitioning packages to support affected workers. However, given the government’s strong ideological stance on reducing state intervention, this may be a difficult path. Building consensus will be key to avoiding civil unrest as these changes unfold.
Editor: what long-term effects could this wave of privatizations have on Argentina’s economy?
Dr. Villar: If executed prudently, privatization could result in a more efficient allocation of resources and improved services, potentially leading to economic growth. However, there are risks involved, particularly if the privatized entities prioritize short-term profits. Furthermore, if consumer costs rise or job losses escalate, it could lead to greater social discontent, complicating the political landscape for Milei. The balance between attracting foreign investment and protecting local jobs and services will be crucial as Argentina moves forward with this strategy.
Editor: Thank you, Dr. Villar, for your insights on this important topic. We appreciate your time.
Dr. Villar: Thank you for having me. It’s been a pleasure discussing these critical developments in Argentina’s economic policy.
