Milei’s plans for the energy sector: tariffs, subsidies, and the future of YPF

The sector is waiting for the president-elect’s decisions regarding five key positions that will define his policy

President-elect Javier Milei has provided some answers regarding his energy plan, speaking of tariffs, fuel, and state-owned companies such as YPF and Enarsa. The energy sector will be led by consultant Eduardo Rodríguez Chirillo. His team is currently preparing measures related to infrastructure and exports. 

On the day after the run-off, oil company YPF shares rose more than 10%. The sector is currently wondering who will occupy five key positions that will define Argentina’s energy policy.

In his first interviews, Milei was asked about some points on the energy agenda that should be resolved in the coming weeks. On the one hand, Economy Minister Sergio Massa and oil companies and refineries had made a “gentlemen’s agreement” regarding fuel prices, which is set to be finalized at the end of the month. 

Tariffs are another item that needs to be addressed. Within the current inflationary context, the International Monetary Fund (IMF) is pressing for raises in order to accommodate the public sector’s balance sheet. It is estimated that two-thirds of users pay less than 20% of what public utilities cost.

Regarding these issues that have a direct impact on people’s purchasing power, Milei said that he “believed these price adjustments must be paid by the state in terms of tax reductions or tax redesign mechanisms to benefit a company’s cash flow, so that the impact on prices is minimized.” 

When questioned about what would happen with subsidies to the most vulnerable sectors, he said that he would maintain them until real wages had recovered.

Milei’s energy team will be led by attorney Eduardo Rodríguez Chirillo, who has been living in Spain for more than 20 years and working as an independent consultant. 

He will be accompanied by Carlos Casares, who is expected to be a key person for the oil and gas sector. Casares was Enargas director and Hydrocarbons undersecretary during the Mauricio Macri administration. Other names on the team are Jorge Garavaglia, a consultant specializing in infrastructure and renewable energies, and Luis de Ridder, who worked for almost 30 years at Tecpetrol.

Although Milei was very close to former Juntos por el Cambio presidential candidate Patricia Bullrich during the last part of the campaign, he did not add her energy specialists to the team. Bullrich’s strategy has been carried out by former Energy and Mining Secretary Emilio Apud, who did not hold meetings with Chirillo. 

There is uncertainty among Bullrich’s teams as to whether they will be included. Horacio Rodríguez Larreta’s energy advisors do not expect to be called.

A person close to Bullrich who will have a place in Milei’s team will be former Energy Minister Javier Iguacel, who replaced Juan José Aranguren during the Macri administration. Iguacel could occupy the presidency of YPF, a company where he worked during the 1990s. 

“We would like to add him to our team,” Milei said only when asked about Iguacel.

There are key energy positions that still need to be filled. It is still not clear who will lead the Energy Secretariat or whether it will depend on the Ministry of Economy or Infrastructure. 

The presidency of YPF is also yet to be determined, as is the head of Energía Argentina, formerly Enarsa. This company will be in charge of the most important infrastructure works to be carried out in order for the country to be self-sufficient energy wise next winter. It is also one of the state companies with the largest management of public funds due to the concentration of LNG imports.

Beyond the individual names, the importance will be organizational. La Libertad Avanza’s (LLA) idea is to privatize YPF and Enarsa in the medium term. “Everything that can be left in the hands of the private sector will be left in the hands of the private sector,” Milei says. 

In the case of YPF, he states that first they will seek to “rationalize its structure”, for which reason they expect to divest YPF’s business units, according to Ámbito. 

There is also the issue of regulatory agencies, such as ENRE and Enargas. In addition to changing their authorities, they might also look to modify the way they are elected in order to establish technical management through contests.

Definitions regarding oil and gas exports, the launching of new infrastructure mechanisms so that the private sector can participate, and changes in the LNG law so that it can be approved by Congress in line with the president’s ideas, are among the first energy measures set to be applied.

Another important position that needs to be filled is the vice presidency of Cammesa, the company in charge of managing the wholesale electricity market. There are also areas related to nuclear energy, such as the National Atomic Energy Commission (CNEA) and the state-owned company Nucleoeléctrica (NASA), which manages the three nuclear power plants. It will also be relevant who will be in charge of important dams with binational presence, such as Yacyretá.

Originally published in Ámbito


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