YPF SA, Argentina’s biggest energy company, is looking for a partner in its electricity-generation unit and plans to appoint a financial adviser for the process.
Bloomberg reports that the company is seeking between $500m and $1bn in new capital for YPF Energia Electrica SA and wants to retain operational control, as it expands its electricity-supply business in Argentina.
Argentina’s production of 37 GW lags behind Brazil’s 129 GW and Mexico with 63 GW. YPF contributes about 4 percent of the input to Argentina’s power grid and aims to increase it to 6 percent by 2018 as the company finishes building one of two plants in the Neuquen province, another facility in the Tucuman province and a wind park in the Chubut province.
YPF is already collaborating with other companies on those projects. That includes General Electric Co., which is installing a 9F turbine in Tucuman and a gas turbine in Neuquen, according to Scott Strazik, a vice president for GE Power. The projects will add 575 MW to YPF’s current production of 1,181 MW.
Meanwhile doubts are being expressed about whether Argentina can meet its renewable energy plans.
Argentina plans to install more than 9 GW of renewables by 2025 but according to a new report from S&P Global Ratings, bringing renewable generation capacity to 20 per cent could prove a struggle due to the country’s weakened credibility following its economic collapse in 2001.
The report suggests Argentina may encounter pushback from foreign investors and capital markets because of this, which could cause a problem considering the proposed renewable strategy would require a total investment of roughly $15bn.
The report recommends Argentina requires wider institutional improvements and a stronger, more investor-friendly regulatory framework to assure investors high risk-return tradeoffs are justified.
Argentina and the International Energy Agency have agreed to increase their co-operation with a new bilateral programme on energy statistics.