Argentina watch: La Rioja power rates, Santa Cruz dam, Chihuido financing

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Monday, April 18, 2016

Argentina's La Rioja province will seek an agreement with the national government for discounted electricity rates, following the lifting of consumer power subsidies by President Mauricio Macri.

The subsidy reform, implemented under a national energy emergency declared by Macri's government, is meant to remove market distortions and attract much-needed investment in energy infrastructure.

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Rates for some La Rioja consumers have increased by 700% as a result, a local government statement said, hurting productivity for large consumers and power purchases for residents, who have seen rates for natural gas, public transport and water all increase under Macri.

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Officials from the Santa Cruz province government were scheduled to meet with national energy minister Juan José Aranguren in Buenos Aires on Monday to discuss the US$4.7bn Kirchner-Cepernic dam project.

National energy planning secretary Daniel Redondo said this month that the project will go forward, but that its environmental, technical and financial terms will need to be modified.

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A pending debt deal with bondholders in the US will allow Argentina to obtain better financing terms from Russia for the 637MW Chihuido multipurpose dam in Neuquén province, said governor Omar Gutiérrez.

Calling Chihuido "a priority for the national government and for the government of Neuquén," Gutiérrez said the two countries are working toward a final loan agreement, and on improving the project's design.

Gutiérrez made the comments upon his return from an official visit to Moscow led by Argentina's foreign minister Susana Malcorra, reported state-run newspaper Neuquén Informa.

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