Milei prepares Aerolíneas, YPF for privatization in Argentina

He president Javier Milei took the first step towards privatizing state companies Argentinian with a far-reaching decree that opens the door for private companies to take control of key sectors.

Mileia libertarian who wants to reduce government controls Government and deregulate to activate the Argentine economyannounced on Wednesday night a series of reforms that would allow dozens of state-controlled companies, many of which are losing money, to be sold.

“Repeal of the regulations that prevent the privatization of public companies“, said Milei in a televised message, while listing a list of reforms. He added that the legal structure of all state-owned companies would be changed to completely clear the way for privatization.

Milei campaigned with this message. He mentioned Aerolíneas Argentinas SA, railway networks, state media companies and the water and sewage company AySA as assets to be sold to private operators. He also said he would target state oil driller and refiner YPF SA and energy company Enarsa after a period of “transition”.

The only company that Milei highlighted in his announcement was Argentinian airlines, since the Government has spent hundreds of millions of dollars a year to prop it up. He said he had authorized a transfer of shares—probably to employees—and that, at the same time, it would free the air travel industry from Argentina.

Yes ok Milei may attempt to privatize companies by presidential decree, it is likely to face resistance in the Congresswhere his party is in the minority, and could have difficulty getting enough votes to approve the divestments.

Paulo Farinapartner of the consulting firm Vis Viva, based in Buenos Airessaid in an interview that he does not believe that this decree will be supported by Congress, since it involves too many interests for a coalition in Congress not to try to reject it.

This privatization drive Milei recalls a similar policy pursued by former President Carlos Menem, the pro-market leader of the 1990s, who sold several strategic assets in an attempt to reduce the size of the government after a period of hyperinflation.

After a deep crisis that peaked at the end of 2001, Argentina He chose to renationalize some companies in an era of leftist leaders. They recovered AySA in 2006, Aerolíneas Argentinas in 2008 and YPF in 2012. Milei, determined to cut public spending and subsidies, wants to reverse all that.

In an interview with Bloomberg News during his campaign, Milei said it would take a couple of years to privatize YPFbecause the company has been destroyed and selling it today at market prices would be giving it away, he said.

YPF and other Argentine energy companies have struggled with strong regulation to protect consumers from the currency devaluations that drive the inflationwhich restricts your income and investments.

The shares of the state oil company listed on NY They are still trading around 20% lower than when the government nationalized it in April 2012, taking control from Spain’s Repsol SA, even after Milei’s election victory last month produced big gains in the stock market.

To complicate matters, a US court ruling this year ordered Argentina pay some US$16 billion after making errors in technical measures during nationalization. The Government has said it will appeal.

However, during the last decade, YPF He has channeled his nationalist role to successfully spearhead the development of the shale riches of Argentine Patagonia and is leading plans for the construction of gas pipelines and for the export of liquefied natural gas.

Milei has tapped executives from Argentine-Italian billionaire Paolo Rocca’s oil and steel empire to lead YPF.

It may be more difficult to privatize YPF than other companies, since the 2012 nationalization law contains a clause requiring two-thirds of Congress to approve the sale of government shares, rather than just a simple majority.