In a conversation with the energy affairs consultant of the presidential pre-candidate for «Libertad Avanza,» Javier Milei, Eduardo Rodriguez Chirillo, provided our magazine «Energía en Movimiento» with proposals related to the energy policy program presented to the Argentine Council on International Relations (CARI).

Eduardo Javier Rodríguez Chirillo is a professional with more than 28 years of experience in the energy sector in Latin America, including 14 years in México. He has played key roles in the expansion of the electricity sector and in renewable generation projects in México and Honduras. He has also held relevant functions in the Argentinean Government, drafting norms and regulations in the energy sector.

Currently, he is an advisor in specific consultancies in Argentina and in projects convened by the Inter-American Development Bank (IADB). His approach aims at the structuring of green hydrogen production projects for electricity generation in Latin America and Europe. In addition, he has participated in the creation of regulatory standards and public policies in Argentina and Spain.

Among the proposals for the sector, they suggest various measures aimed at improving the production and distribution of electricity, natural gas, and oil in the country, as well as in its energy sector institutions.

He highlighted the essential need for the recovery of the regulatory bodies within the energy sector, which are currently under intervention. He proposed the establishment of a single national energy regulatory entity that collaborates in a coordinated manner with the Competition Defense authority to prevent situations of dominant market position by certain industry players.

He emphasized the importance of establishing «clear and stable rules for market operation» to provide appropriate price signals that encourage private investment and reduce government intervention in non-essential areas. He advocated for a review of the State’s functions in the energy sector, immediate elimination or replacement of subsidies granted for industry activities such as hydrocarbon production or liquefied petroleum gas (LPG) activities. He also supported private sector participation in competitive markets and infrastructure development through bidding processes. He stressed the need for investments to overcome infrastructure limitations in electricity and gas transport, pipelines, LNG terminals, and ports.

In order to make an accurate assessment of the sector, Javier Milei’s consultant believes that it is necessary to immediately reverse the negative outcome of the national energy balance (BEN), which has resulted in a loss of $30 billion for the country over the last 10 years and $4.4 billion in 2022 alone.

He explained that this situation is not coincidental but rather the result of the long-standing belief that self-sufficiency was the ultimate goal, achieved at exorbitant costs covered by state subsidies.

He emphasized that the current scheme is unsustainable, given the critical situation of meeting local market consumption and potential growth.

To address this, he highlighted the need for a change in the state’s perspective, fostering real intentions of global integration and leveraging available value, including energy resources.

Regarding tariff policies, he urgently called for the initiation of the Comprehensive Tariff Review (RTI) process to determine actual supply costs and subsidies that should be maintained for vulnerable individuals.

He stressed that subsidies should not support industry activities directly, but rather target vulnerable people up to a certain threshold, without subsidizing the price. He argued that energy price subsidies discourage responsible use and energy conservation, and that currently, users only cover 40% of the cost.

He also highlighted the necessity to shift the state’s focus towards global openness and integration through long-term export commitments. This strategy aims to improve trade exchange rates, particularly by leveraging the energy resources of Vaca Muerta, provided the necessary infrastructure is established and export authorizations become non-discretionary, granting producers or marketers the right to export under set conditions.

Key points of the presented energy policy plan include:

1.Respecting agreements and maintaining legal security without affecting vested rights.

2.Establishing a transparent and predictable regulatory regime with industry stakeholders’ participation to build investor confidence.

3.Encouraging private investment in energy transport infrastructure, including pipelines, power grids, LNG terminals, and ports, to enhance energy production and distribution.

4.Establishing long-term contracts between producers and consumers, and phasing out inefficient technologies.

5.Restoring investment confidence and shifting the state’s focus to favor exports and global integration.

6.Restoring regulatory bodies’ normal operations and unifying them (Gas and Electricity) as in Europe.

Concerning electricity production and distribution, the plan suggests that CAMMESA (Market Management Company for the Wholesale Electricity Market) return to its original role as a dispatching organization and administrator of the wholesale electricity market, ceasing its role in fuel procurement for generators, who would then be responsible for their own gas supply.

The plan also proposes reintroducing a forward market to enable supply contracts between generators and distributors and large users.

For natural gas, the plan aims to reduce production subsidies and shift contracts from the GasAr Plan with CAMMESA and ENARSA to direct agreements between producers and consumers. Additionally, the plan advocates for establishing liquefied natural gas (LNG) as an industrial product, similar to methanol or urea, by addressing regulatory restrictions hindering its export market development.

Regarding the energy transition, Rodriguez Chirillo stated that measures should be taken to meet international commitments. 

He cautioned against blindly copying Europe’s approach due to differences in energy matrices and issues. He emphasized utilizing natural gas to complement renewables and lower costs, and outlined strategies to achieve this:

1.Fulfill National Determined Contributions (NDCs) using Argentine natural resources without subsidies.

2.Utilize natural gas to generate value from Argentina’s Non-Conventional Resources (second-largest globally) and position it as a complement to renewables during the energy transition.

3.Promote the installation of renewable wind and solar parks, hydro, geothermal, and bioenergies, including hybrid projects, aligned with electricity demand and non-state-coordinated decisions.

4.Implement Nature-Based Solutions (NBS) to capture CO2 through photosynthesis and land use (reforestation, pastures, etc.), leveraging available space at lower costs than other parts of the world, contributing to NetZero alongside natural gas.

5.Incentivize energy efficiency technology adoption and energy conservation, key to greenhouse gas reduction, without energy price subsidies.

6.Employ renewable energy for thermal needs such as industrial processes, hot water, and heating, targeting areas with supply deficits.

7.Facilitate and enable the energy transition for SMEs so that those interested can access the necessary information to anticipate the context, identify improvements, and access equipment and financing (there is International Financing Available for this purpose).

Concerning biofuels, he argued that the state should only regulate the blending percentage. The current regulation’s expiration in December 2030 deters investment and disrupts current business. He advocated for a long-term legal framework for both investment recovery and industry consolidation.

He also mentioned the need to «regulate the use of biogas as a public service, which is currently being used in an isolated manner.»