BUENOS AIRES (Reuters) - Argentina’s lower congressional house will start debating the renationalization of the country’s largest energy company on Wednesday, a measure that is popular at home despite condemnation abroad.
President Cristina Fernandez angered Spain and other European trade partners last month when she unveiled the plan to expropriate a 51-percent controlling stake in YPF (YPFD.BA) from Spanish oil major Repsol (REP.MC).
But Fernandez’s push to return YPF to state hands following its privatization in the 1990s has been cheered by Argentines who blame such free-market policies for causing a dire economic crisis a decade ago.
Senators passed the bill with overwhelming support last week with most opposition members voting in favor. A similar result is likely in the lower house, which Fernandez also controls, allowing her to sign the bill into law later this week.
“I think we’re going to easily get more than two thirds of the votes,” said Agustin Rossi, head of the ruling party bloc in the lower house, defending Fernandez’s main justification for the takeover - slack investment to increase fuel production.
“YPF’s problem under Repsol was the low levels of investment,” he told local television. “Under state control, reinvestment will be the order of the day. Profits won’t be distributed and I’m certain we’ll have an aggressive policy of seeking partnerships with other companies.”
While debate is due to start later on Wednesday, a vote is not expected to take place until Thursday.
Once the expropriation becomes law after congressional approval, the focus will shift to how much the government will have to pay in compensation to Repsol, which denies Fernandez’s charges of underinvestment.
Government officials have already indicated they will not pay the $9.3 billion the Spanish firm has asked for, but an Argentine valuation court will stipulate the sum. YPF accounts for about 20 percent of the Repsol group’s net profit.
Madrid has vowed to curtail multimillion-dollar imports of biodiesel from Argentina in retaliation for the YPF takeover, while the European parliament has urged the European Commission, the EU’s executive body, to consider reprisals.
Analysts have been warning of an energy crisis in Latin America’s No. 3 economy for years, due to surging demand and stagnant production that critics blame on government policies such as price controls and export curbs.
The country registered an energy deficit for the first time in 17 years in 2011 as fuel imports doubled, eroding the trade surplus and pushing the issue to the top of Fernandez’s agenda.
Reporting by Helen Popper and Hugh Bronstein; Editing by W Simon