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Argentina renegotiates with Venezuela delayed payments for fuel oil
El Universal
June 29, 2009

The obligations with Venezuelan state-run oil firm Pdvsa amount to USD 813.8 million

Buenos Aires in 2007-2008 failed to pay Pdvsa virtually all of the bills due in connection with the shipments of fuel oil and gasoil to feed Argentinean thermal plants (File Photo)

Economy

During the last two years, Argentina failed to pay Venezuela debts related to fuel oil shipments that were imported by Cristina Kirchner's administration to alleviate a gas shortage in the South Cone country. Therefore, the government of Argentina was forced to renegotiate the debt with Venezuela at an interest rate three times higher than the rate established in the agreements signed in 2004.

In 2007-2008, Cammesa Argentina's state wholesale power market administrator owned by the Ministry of Planning failed to pay Pdvsa virtually all of the bills due in connection with the shipments of fuel oil and gasoil to feed Argentina's thermal plants. In March, and given the possibility that Pdvsa cut the shipments planned for this year, Cammesa's executives decided to negotiate a refinancing plan with the Venezuelan oil company.

After several meetings, the experts agreed to a "reconciliation balance sheet" which resulted in a USD 813.8 million debt by March 31, 2009.

The renegotiation scheme provides that Venezuela will charge a LIBOR rate plus a 6 percent annual margin rather than the 2 percent interest rate, which was initially charged in the original agreements, the Argentinean newspaper Clar n reported.

The accumulated debt was registered in 12 documents signed by Cammesa. The debt will be paid quarterly with money from the Unified Fund, a fund of the electricity sector.

Although the authorities of Cammesa and Pdvsa have already signed all the papers, there is one step pending. The refinancing contract has to be signed in the next few days by the Minister of Economy, Carlos Fern ndez and the Minister of Federal Planning, Julio De Vido.

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