Power to the people?

By Michael Soltys

Buenos Aires Herald Senior Editor

The hottest week of this summer has not surprisingly resulted in blackouts plaguing various city neighbourhoods on a wider scale than ever (including the immediate vicinity of the presidential residence, according to a letter to this newspaper published yesterday) but the problem extends rather beyond a simple correlation between searing temperatures and record power consumption. Anybody can play the blame game — the government invariably holds responsible and fines the power utilities, these attribute the problems to populist pricing policies leaving them deeply in the red and some advocate of Spartan frugality could even criticize the general public for investing so heavily in energy-guzzling air-conditioning instead of just sweating it out. But everybody transferring the blame has also been accompanied by everybody being wrong — the total collapse of the national grid forecast by critics for almost a decade now has still to materialize and yet public services are a long way from providing the problem-free summer so confidently promised by Federal Planning Minister Julio De Vido a few months ago after at least 2,000 blackouts great or small in this city on Friday alone.

There are at least two reasons why the prophets of a total energy apocalypse have so far been wrong despite an obviously ruinous system of populist pricing which both encourages wasteful consumption and discourages bankrupt utilities from expanding supply and both these reasons present problems — a soaring fuel import bill and economic slowdown. If 2012 ended in a 1.2 percent decline in manufacturing activity (according to official statistics), think what the energy shortfalls would be with the “Chinese” growth rates of previous years. As for the fuel import bill, steadily climbing for the last five years, the problem has moved beyond the absurdity of paying prices three or four times those begrudged to local producers — the drought in Brazil (especially its northeastern sertão) has reduced its hydro-electric generation to 30 percent of capacity, thus raising the prices of fuel imports (especially liquefied natural gas) for the whole region, including Argentina. So much so that at the recent bicontinental summit in Chile, President Cristina Fernández de Kirchner promised her Brazilian counterpart Dilma Rousseff that Argentina would resume the export to Brazil of a gas it does not really have for the first time since 2009.

Perhaps one day all the money squandered on subsidies and imports will be ploughed into infrastructure but this may be too much to expect for an election year.