Edesur changes hands: the Italian Enel will put all its assets in Argentina up for sale

The European holding defined that the country, along with Peru, is no longer part of its strategy. He will stay in Chile, Colombia and Brazil.

The Italian holding company Enel announced this Tuesday that as part of a global restructuring of its operations, it will divest assets that it has located in various countries, including Argentina. Here will put a sale sign on its shareholding in Edesur; the El Chocón hydroelectric plant, and the CTM and TESA transmission lines (which connect the electrical energy systems between Brazil and the Argentine Northeast), and Yacylec (transports energy from Yacyretá).

The objective of this restructuring, said the European group, is to gain liquidity to significantly reduce your debt. The global appraisal of the assets put up for sale amounts to 21,000 million euros ($22 billion).

In the announcement, in addition, that as part of this adjustment it will completely abandon the operations it has today in Argentina, Peru and Romania. In Latin America it will only maintain a presence in Brazil, Chile and Colombia.

For at least two years, Argentina has been talking about the departure of Enel. The rumors even pre-existed the departure of the Pampa Group (Marcelo Mindlin) from Edenor, a firm that was sold to the Vila-Manzano group for just 100 million dollars in December 2020. Until today, Edesur had been receiving fresh money from Enel -the capitalized at about US$ 850 million – but that would now end.

Some clues about the intention to leave Argentina had been given exactly one year ago, in November 2021, by the CEO and General Manager of Enel, Francesco Staracewhen presenting the group’s Global Strategic Plan to 2024.

Although at that time he had ratified the continuity of operations in the country, Starace slipped statements that invited him to think about an exit plan. “Our position is to stay in Argentina and see what happensWe don’t want to leave but we want to know what the (energy) policy is that the Government will adopt next year, and according to that we will see what is the best decision for us”.

Francesco Starace, CEO and general manager of Enel. Photo Reuters

Starace, like the local Edesur executives, was excited about tariff restructuring of the government of Alberto Fernández. The authorized increases resulted, in the end, in the segmentation of tariffs that is only now being applied to a part of the population, although the bulk of users maintain a high percentage of subsidies on their ballots.

Another suggestion that leaving the country was an option was what Starace said: “The future is so big for Argentina that we must focus on what is important. One is the interconnection with border countries. Provided there is clarity at the political level so that investments do not have a very high risk”.

Anyway, complained about the lengthy rate freeze: “When you become an adult and mature, you take responsibility for what happens. In Argentina, the political system has the responsibility to give regulations that do not change, that there are clear rules and that it opens up a bit to the competition. In the last 20 years, regulatory entities have been intervened for 18 years due to emergency situations. There is no emergency that lasts 18 years. This model of ruling by decree is unsustainable.”

The decision to leave Argentina, although it is part of an international strategy, comes after the firm went through years of rate freezewhich are only now beginning to be updated.

The other assets that will be put up for sale are those in Peru and Romania. Now will focus on six major marketsfrom Italy and Spain to the United States, Brazil, Colombia and Chile.

However, it will also divest its business in Ceará (Brazil) to increase the focus of its distribution networks in large cities, such as Rio de Janeiro and Sao Paulo.

Enel, which is owned by the Italian state, took over all of these firms when in 2009 it took control of the Spanish company Endesa. In Argentina it is managed by the Brazilian Claudio da Cunha.

“The pivotal year of the group’s long-term rationalization strategy is expected to be 2023.” the company maintained.

The El Chocón hydroelectric plant, which Enel puts up for sale.

The El Chocón hydroelectric plant, which Enel puts up for sale.

Italy’s largest utility company is struggling with mounting debt after a spate of acquisitions to boost renewable energy production. In recent years, Enel has also been hurt by rising costs amid the energy crisis, droughts that have reduced hydroelectric power production, and lower demand due to the pandemic.

Starace said this Tuesday at the strategy presentation that difficult times are still ahead, citing both high gas prices and government measures to deal with the crisis. He said that he expects “at least a couple of years of turbulence” and, therefore, the company is “taking a more conservative approach”.

Peru’s assets, which could be valued at around US$5 billion, have already attracted the interest of potential strategic investors and investment funds.

company shares rose up to 2.9% in Milan to its highest level since July 11.

The company intends reduce debt to 52,000 million euros with the sale of these assets.

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