To understand the departure from the country of the Italian company Enel, in charge of the Edesur concession, one must remember the words that the CEO said a year ago and general manager of the company worldwide, Francesco Starace: “Our position is to stay in Argentina and see what happens. We don’t want to leave, we want to know what the policy is [energética] who will adopt [el Gobierno] next yearand according to that we will see what is the best decision for us”.
Since then, the Government’s rate policy remained unchanged, beyond the recent application of rate segmentation, who in the sector are still trying to understand how it works. The electrical distributors that operate in the metropolitan area of Buenos Aires (AMBA) –Edesur and Edenor- had an increase of only 8% of their income this year in March, almost the inflation that Argentina has in a month. “Non-decisions also have their consequences”, they say with regret in the Italian company.
Starace confirmed today at the annual presentation of the strategic plan that the company was going to “reposition their businesses”. The euphemism implies, among other decisions, the exit of the Enel group from Argentina, Peru and Romania. In Latin America, the company will focus its assets in Brazil, Chile and Colombia, where it already has a presence, while in Europe it will continue to operate in Italy and Spain.
Enel is a private company, listed on the Milan and New York stock exchanges, and has the Italian State as its majority shareholder (it owns 27% of the shares). The rest is in the private hands of institutional investors, including the BlackRock fund.
Enel’s decision to sell the Edesur concession and leave the country comes less than two years after Pampa Energythe company led by Marcelo Mindlin, sell Edenor for US$100 million to the consortium led by Daniel Vila, José Luis Manzano and Mauricio Filiberti.
Maurizio Bezzeccheri, director of Enel in Latin Americawas in Argentina less than four months ago and, in an interview with THE NATIONresponded when asked why they continued to operate in the country: “It is a question that we ask ourselves daily and one day we will have an answer. Here we are doing miracles to invest in the distributor. In the last five years, we have invested around US$850 million. Edesur receives the money from holding to be able to invest and we are the distributor that has invested the most in Argentina in the last three years”.
“When you become an adult and mature, you take responsibility for what happens. In Argentina, the political system has the responsibility of giving regulations that do not change, that there are clear rules and that it opens up a bit to competition”, said the Italian executive, who had been CEO of Enel in Argentina between 2016 and 2019, when the arrival of a new government renewed hope in the group.
However, it was the management of Mauricio Macri, the one who reapplied the rate freeze in the second half of 2019after losing the STEP.
The return of Kirchnerism to power did not change the situation. In the last three years, the distribution rates in the AMBA (the income of Edenor and Edesur) increased 31.5%, when costs rose 321%, as they maintain in the company. both companies they sent a letter to the electricity regulator (ENRE) warning about this situation and about “the quality and continuity of the public service”.
The lack of tariff adjustment caused Edesur to accumulate a debt of $120,000 million with the State. This anomalous situation was expected to normalize at the end of 2020, when the then Economy Minister, Martin Guzman, presented at the budget project article 87, by which a moratorium was applied and a payment plan was designed.
That article was renewed this year with the new budget project, since at this time the ENRE or the Ministry of Energy never called on the companies to negotiate. The problem: there was no political endorsement for the State itself to commit to a rate increase plan so that the distributors settle their debts and stop financing themselves with the State.
The lack of predictability and the habituation to the emergency situation were, therefore, another of the reasons that led Enel to decide to leave the country. “In the last 20 years, regulatory bodies have been intervened for 18 years due to emergency situations. There is no emergency that lasts 18 years. This model of ruling by decree is unsustainable”, they point out.
Russia’s invasion of Ukraine directly affected Enel’s indebtedness and profit margins, since, Despite being one of the main electricity generation and distribution companies in the world, it does not produce gas or oil. Therefore, its costs skyrocketed this year, without being able to transfer this increased expense to its clients, due to the contracts already signed with prices prior to the outbreak.
Therefore, Enel made the decision to focus on countries that have a higher degree of commitment to the energy transition. According to an index developed by the Massachusetts Institute of Technology (MIT), which measures how fast the energy transition process is, Argentina is ranked 68th in the ranking made up of 76 countries.
To give an example: Enel will have 1,200 electric buses installed in Santiago and 1,500 in Bogotá by the end of the year. In São Paulo, the goal is to reach 1,000 buses in the coming months. “In Argentina we are still fighting to be allowed to enter an electric charger”, they usually repeat in the company.
In 2009, the Enel group acquired the majority shareholding of the Spanish company in an international transaction Endesawhich at the local level had the concession of Edesur and power generation assets Costanera Generation, Dock Sud and the hydroelectric concession the chocón.
The company already began negotiations this year to sell its shares in Generación Costanera and Dock Sud, and there could be news in the coming months, since there are advanced conversations with a national capital company. The concession of the El Chocón hydroelectric plant, for its part, expires in August 2023 and still in the Government they did not give signs of a renewal.