July 28, 2014
Victory Front ends discussion on YPF payout
Ruling-party senators reject opposition request to question Valuations Tribunal official on compensation
Victory Front senators yesterday made clear the US$5 billion in compensation that will be paid for the 2012 expropriation of a majority stake in YPF will not be discussed.
The government’s allies in the Senate said yesterday they will not heed to opposition demands to question the president of the ad hoc committee of the National Valuation Tribunal that issued a price for YPF, which closely matched the government’s agreement with Repsol that was sealed last month.
Radical Party (UCR) senators had requested that Daniel Martín return to the Senate to answer questions about the tribunal’s final valuation, expressing serious doubts about the number, which they said had been “drawn up after the agreement for YPF was sealed.”
Senators Aníbal Fernández and Miguel Ángel Pichetto of the governing Victory Front justified the decision to not invite Daniel Martín on the basis that he had already spoken before the plenary and that in any case the National Valuation Tribunal’s decision was only a resolution and not a binding sentence.
Despite the disagreement, the ruling FpV is thought to easily have the necessary votes to get the compenstion approved by Congress. The deal is expected to pass the plenary commission today, and it will be voted on by the full Senate on Wednesday of next week with the goal of getting approval from the Lower House of Congress on April 24.
Daniel Martín addressed the senators last week and was available for questions on the tribunal’s decision but Radical senators reiterated a request that he return so that they could ask further questions about the valuation, issued in a three-page document that the senators received the same day of his testimony.
Senator Fernández emphasized that the Tribunal’s resolution was only “a suggestion or advice, but that it was not a sentence and that the tribunal’s involvement is limited after that.”
Senator Pichetto echoed that argument noting that the compensation deal was “a political decision” led by the government that did not need to be verified by the National Valuation Tribunal, just the Legislative branch.
The Radical stance, as expressed by senator Gerardo Morales, was that the tribunal’s valuation was a constitutionally necessary part of any expropriation and that his bloc had serious doubts about the calculations and the way in which the tribunal arrived at its conclusions, which were suspiciously similar to what the government needed.
Morales pointed to press reports from November 2013 that suggested a preliminary deal with Repsol had been hammered out that included US$5 billion in compensation which was later validated by the National Valuation Tribunal, contrary to proper procedure. Morales also suggested that the Radical party was evaluating the possibility of filing a criminal complaint against the National Valuation Tribunal.
UNEN Senator Fernando “Pino” Solanas agreed with the UCR stance and accused the valuation of being “cooked” to match the deal with Repsol and was thus invalid.
The debate ended in acrimony as Victory Front senators invited the opposition to make a criminal complaint if they wished but that Daniel Martín would not be invited back to the plenary.
Environmental concerns raised
The session, which included guests invited by the opposition such as energy experts and representatives from the Mapuche indigenous communities of Neuquén and Río Negro, also included more questions about the environmental damages allegedly left behind by the Repsol administration as well as the potential for large payouts for lawsuits against the company.
Nicolás Gadano, an economist specializing in energy matters, gave a positive analysis of the deal saying that the price paid for YPF was beneficial for Argentina but did question that the interest rates on the bonds used to pay for the expropriated shares.
Gadano said that they were very high and were a result of the government’s current inability to pay for the shares in cash.
Mapuche leaders implored the national and provincial governments to consider the environmental consequences of hydrocarbon exploration on their livelihoods and urged greater consultation with the indigenous communities.
The argued that their interests did not always necessarily coincide with the state’s interests in developing oil fields.
Senator Pichetto and Gabriel Rolando Cherqui, representing the “Kaxipayin” Mapuche community, exchanged words after the senator recalled that Mapuche communities had signed contracts with YPF-Repsol that had greatly boosted their incomes and benefited their communities.
Cherqui responded that the communities had no other choice than to work for the oil companies in the region “because no other way of life is possible” as a result of oil exploration and that “we are in favour in defending the economy but not at the expense of our community.”
Former Energy Undersecretary Gustavo Calleja, who served under the presidency of Raúl Alfonsín, has been invited to speak to the plenary today before voting begins on the agreement.