Lack of gas and electricity: companies are already preparing for a winter with cuts

Industrialists are concerned not only about the lack of foreign currency to buy the gas Argentina will need in the winter, but also about the availability of ships
Industrialists are concerned not only about the lack of foreign currency to buy the gas Argentina will need in the winter, but also about the availability of ships

To the difficulties that companies have in operating in Argentina, due to high inflation and regulated prices; lack of foreign currency; exchange rate gap and fiscal deficit that promotes the creation of taxes and increases in gross income rates, among many others, this winter will be accompanied by restrictions on energy supply. Although cuttings are common in seasons with very low temperatures, this year they would be aggravated by the shortage of liquid dollars in the Central Bank’s reserves and by uncertainty in terms of world supplyI stemmed from the Russian invasion of Ukraine that was unleashed at the end of February.

The price of liquefied gas (LNG) has risen substantially from the price paid last year – it went from USD 8 to USD 35 per million BTU – and it is not known for certain whether the government will be able to pay for all the ships it pays. they are needed to cover the expected demand for the winter. Nor whether the required gas will be obtained.

Some industrial sectors, such as the petrochemical or steel industry, use gas as an input, but others also require it to generate energy. For this reason, they are already preparing for a harsh winter and have started planning strategies to avoid the greatest possible impact on production.

It is not known whether the government will be able to pay for all the ships needed to cover the gas demand forecast for the winter

Indeed, some economic advisors and investment banks already anticipate a strong impact on the business. A report by JP Morgan states that if the rise in the price of energy cannot be offset by the income of the agricultural complex, the likelihood of Argentina falling back into recession increases by 50%.as published Infobae this Friday.

Faced with this scenario, the UIA formally requested a meeting with the Secretary of Energy, who leads Dario Martinezwith a copy to the Ministers of the Economy, Martin Guzmanand productive development, Matias Kulfa, to create a work table whose purpose is to provide for any limitations in the supply of gas. The issue was discussed during the meeting held a few days ago by some heads of the production plant with the CGT and the president Alberto Fernández, and Kulfas also talked about it, during the press conference he held after the presentation of the plan “Argentina Productiva 2030 “.

Production Development Minister Matías Kulfas said they are working with the UIA, led by Daniel Funes de Rioja, on a plan to address possible energy restrictions.
Production Development Minister Matías Kulfas said they are working with the UIA, led by Daniel Funes de Rioja, on a plan to address possible energy restrictions.

“It is not that the President cannot guarantee gas, what is happening in the world is that there is a shortage and prices have skyrocketed. The situation is critical in the world. Depending on the gas available and if there are any shortages, we will evaluate it, we will see how we will coordinate it to give priority to supply. It was a good initiative proposed by the Industrial Union, “Kulfas said.

The minister added that the government is currently concluding the analysis purchases made by the Ministry of Energy and the state company Integración Energética Argentina Sociedad Anónima (Ieasa), in order to have a clearer picture.

What do employers propose?

The proposal that the UIA made to the Government was to create this working table and evaluate, on the basis of how much gas can be guaranteed, how much each region and sector can contribute. With this aim, the institution has already launched an investigation among its associates. “The government should provide the necessary number of ships. In 2021, 56 were needed, but this year the demand will increase and it is possible that there will be 70. So, if those other boats aren’t available, who will contribute? The industry, which is unfair. The sector is very consistent in demand. The residential sector multiplies the demand for gas by three in cold weather. There should be a campaign of rational use by the Government “The sources of the UIA said so.

It is not that the President cannot guarantee gas, what is happening in the world is that there is a shortage and the prices have skyrocketed (Kulfas)

The first thing the presiding entity wants to know Daniel Funes from Rioja This is how much gas will be available, not only for the world supply, but also for how much LNG costs today and for the low currency exchange that the government has. “The party responsible for the supply is the State. Depending on what they tell us, we’ll see what we do there, ”the source said.

Sources in the steel industry told Infobae that an alternative would be to anticipate maintenance shutdowns that usually take place in the summer (Reuters)
Sources in the steel industry told Infobae that an alternative would be to anticipate maintenance shutdowns that usually take place in the summer (Reuters)

But the options are different, depending on the industry. But what is clear is that the industry will ask the government for it if there must be cuts in the supply to the production plants that are on rotation and scheduledin order to allow the establishment concerned to organize its own production.

Sources in the steel industry have reported to this medium that an alternative would be to anticipate maintenance shutdowns that are usually carried out in the summer, as well as holidays.

“We need to see what possibilities each sector has. Maybe you can lower by 50% one and it can continue to work, another can replace the gas, you have to see it individually to organize the production, “they told the UIA.” I see the situation as very complicated. There are many elements that you do not have we do not know the temperature cycle we will have, nor how much money will be used to carry the gas, if possible. The variables are many and we will have to row one by one “, remarked the president of Aluar, Javier Madanes Quintanilla.

According to the entrepreneur, “Today it is difficult to put together a contingency plan because the potential restrictions are many.. On the fly, decisions will have to be made. Finally, the lever is lowered and the drought is expected to pass ”.

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