(Bloomberg) -- Argentina is rushing to put together a “market solution” to build out its national network of high-voltage power lines, a severely neglected part of the grid that’s long capped growth in electricity generation.
Increases in Argentina’s power consumption in recent years have outpaced expansions in transmission by a factor of two, according to President Javier Milei’s newly-appointed coordinator for energy and mining in the Economy Ministry.
“There’s a broad consensus on what needs to be done — and it’s a lot,” Daniel Gonzalez said Wednesday at an event in Buenos Aires. “The big question mark is how we do it.”
Milei, a libertarian in his first year in office, won’t let the government fund new infrastructure projects. Instead, he is trying to lay stronger foundations for companies to make the investments.
“What’s clear is that the government isn’t going to pay anymore,” Gonzalez said. “So how do we create conditions for this to get done as fast as possible and make the private sector feel like it has sufficient assurances to go ahead? Before the year is out we have to publish a concrete proposal, most likely a tender, for solutions that start to turn the wheel.”
In the power sector, much of the government’s effort will come down to deregulation. More broadly, there is the so-called RIGI program of tax, currency and customs benefits for big projects — a marquee section of Milei’s sweeping reform package, which was enacted at the end of August. Gonzalez called the incentives “crutches” that Argentina simply can’t do without if it wants to attract private investment.
Transmission bottlenecks mean power generators have struggled to build enough new plants, in particular wind and solar farms. That’s left the government drawing up contingency plans to avoid industrial cut-offs in the Southern Hemisphere’s coming summer months, when demand for air conditioning soars.
“Last year was a close call,” Gonzalez said. “And this summer we’ll have a little bit less power available, so we’re preparing for the worst-case scenario.”
One clean power executive agreed with Gonzalez’s diagnosis of the problem. “Our project pipeline depends on transmission,” Bernardo Andrews, chief executive officer of generator Genneia SA, said at the event.
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