Bloomberg The privatization of state oil company YPF is no longer part of the reforms that President Javier Milei is trying to pass in the Argentine Congress, according to a summary of the legislation published by the government on Monday (22).
The socalled general bill, which is currently being debated in the Chamber of Deputies, was amended after negotiations with parliamentarians. This is the clearest indication yet that Milei, a radical libertarian whose party has a minority in Congress, is willing to make concessions to push through a package of reforms that would change the structure of Argentina's interventionist economy toward a free market.
YPF is the largest oil drilling and refining company in Argentina. It was nationalized in 2012 to boost development of Patagonia's slate deposits after Spanish owners were accused of neglecting production.
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And while YPF has had some success in this area shale oil now accounts for almost half of the country's production of 760,000 barrels per day it has been hampered by government intervention in fuel prices to curb runaway inflation.
Shares traded in New York have fallen nearly 30% since nationalization. But some investors had recently bought YPF bonds in hopes that Milei would complete reprivatization, which could theoretically make the company more efficient and profitable.
Paula La Greca, an analyst at TPCG in Buenos Aires, said privatization was always unlikely. This is because by keeping YPF under state control, the government has a guaranteed tool to improve Argentina's energy trade balance, which in turn benefits fiscal and monetary goals.
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“YPF was designed as a company to ensure that energy independence is part of national security,” La Greca said.
YPF American deposit bonds rose about 1% by midday in New York after falling sharply before the start of regular trading.
Certainly Milei, who originally said he wanted to put YPF in order before looking to sell it in the medium term, could still revive the plans. However, obtaining the required twothirds majority in Congress would be a challenge.
Making matters worse, a US court has ordered Argentina to pay around $16 billion after it failed to take technical steps in its 2012 nationalization.
Because the government has failed to pledge YPF equity as collateral to investors in an ongoing appeal, a Manhattan judge has given those investors the green light to cover the judgment by taking action against Argentina's assets.
Milei will continue to seek the privatization of dozens of other stateowned companies as he dismantles a bloated government. But the revised version of the law also restricts privatization plans for the stateowned nuclear operator, a satellite company and the Banco Nación.
The president also made concessions in calculating pension benefits. Opposition to his reforms in Congress includes a general strike planned by powerful unions this week.
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