ARGENTINA: Argentine government denies the country is falling into an energy crisis.

A majority of Argentine business leaders fear power cuts and shortages, according to a Reuters poll, fuelling speculation that the country is heading towards an energy crisis, but its government is denying there is a problem. Analysts have warned that Latin America's third-largest economy faces energy shortages as brisk economic growth hits a four-year stride, increasing demand for energy at a time when sector investment is low. In a Reuters survey of 42 business leaders, 81 percent said they feared power cuts during the summer months. Eighteen percent expressed confidence the country has sufficient energy supplies. However the government says energy is "in abundance" and has put down calls for restrictions to be put in place. "The energy savings plan is the same the same that is has been. Therefore we are not going to see any change in the restrictions that are in place today to discourage energy wastage. We are not going to have to impose restrictions because there is not going to a crisis. What we do have to do is be responsible with this non-renewable resource, is to use it in a rational, appropriate way," Planning Minister Julio De Vido said on Wednesday (September 13, 2006). To meet greater demand during the southern hemisphere's summer -- when people crank up air conditioning - the government has called on the entire country to conserve energy. They also launched a plan forcing medium and large companies to generate their own energy if they exceed 2005 consumption levels, in a bid to ensure supplies for homes and small businesses. On top this, the government has been working on several long term energy solutions. Recently Argentine has made a cut in its natural gas exports to Chile, increased tax-free diesel imports to fuel thermoelectric plants, and increased its natural gas imports from neighbouring Bolivia. However energy analysts say these long-term investments will not bear fruit for at least two and a half years, creating an energy gap that will not be breached by the government's generate-your-own-energy bid. The former energy secretary Daniel Montamat says the energy sector has been stagnant for too long - likening it to a person with autism - and now Argentina has to face up to reality and impose restrictions to make in order to make it through the next couple of years. "The circumstances have come to show that we have energy autism. We have wanted to take on this reality of insufficient investment in the sector but we need the capital. Now decisions are being made to move forward important investments in energy infrastructure, but those investments will take their time (to make an impact) and in the meantime we are going to have to impose restrictions and readjustments that are going to be the reality," former energy secretary Daniel Montamat said. But the government insists it has full confidence in the sector, which it has been jump-starting with they help of its hefty budget surplus. In July, President Kirchner singed a bill to invest over $1 billion dollars in the Yacyreta damn, a bilateral energy project with neighbour Paraguay in the Argentine province of Corrientes. While just last month a nuclear energy plan was launched that included a 1.8 billion pesos ($583 million) investment to complete a nuclear plant, named Atucha II, that the government started to build some 26 years ago. But these projects have come under scorn from environmental groups that argue Argentina could solve its problems though clean, renewable sources of energy like wind power. "With the 700 million that they are expected to spend to finish off Atucha, they could install a wind power generator of the same capacity, which would certainly generate a little less energy annually into the grid, but we have the capacity to install something equal to Atucha but that is a lot cleaner and secure," Greenpeace energy campaign leader Juan Ernesto Casavelos said. Wind power production has risen significantly over the past five years, however it still only contributes to less than once percent of the national energy grid. International environment agency Greenpeace has put forth a plan to have seven percent of the country's energy production come from wind by 2013, with the sparsely populated southern provinces of the country providing the perfect place to do so. As the world's top soy oil and sunflower seed oil exporter, Argentina is also an excellent candidate for biodiesel production. Legislators have said Argentina could produce 600 million litres (156 million gallons) of biofuels within the next four years, however as of yet there have been no large investments made into the area. Instead the government continues to focus on the development of natural gas and petroleum resources that currently make 51% and 36% of the energy grid respectively. On Wednesday Congress introduced a bill to encourage petroleum companies to begin searching for new natural reserves through a series of tax incentives. "We do not have huge natural petroleum reserves, but we have petroleum. So we are going to promote incentives so that companies invest in the areas in which they are working and explore into new areas that are yet to have been explored," member of congress, Deputy Agustin Rossi said. However while the bill is waiting to be passed by Congress and the government continues to believe in any imminent crisis, closure signs at the petrol pumps are telling a different story. The corporate leaders responded to a written Reuters poll during a meeting of the Institute for Argentine Business Development, an association of business executives, held in the city of Mendoza, 1,000 kilometres (621 miles) west of Buenos Aires.

ITN Source | September 16, 2006

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