Argentina's YPF takeover heads for final approval
BUENOS AIRES |
BUENOS AIRES May 3 (Reuters) - The nationalization of Argentina's biggest oil company is expected to sail to final congressional approval on Thursday, reflecting broad domestic support for a measure that has rattled foreign investors.
President Cristina Fernandez, a combative career politician who has tightened state control of the economy, unveiled the plan to seize a majority stake in YPF from Spain's Repsol six months after her landslide re-election.
Fernandez, who controls both houses of Congress, secured strong backing for the expropriation bill in the Senate last week and members of the lower house look set to give it similar support in a vote later on Thursday.
Agustin Rossi, head of the ruling party bloc in the lower house, said he thought about 200 of the house's 257 members would vote for the government bill, heralding it as a watershed in the country's energy policy.
"We're going to see a big improvement and a big difference (although) it's probably going to take a few years for us to achieve energy self-sufficiency," Rossi said.
"This isn't just about YPF, (all companies) will have to keep in mind that their business is a matter of public interest and the aim is self-sufficiency," he added, referring to part of the bill that declares the whole sector of public interest.
Fernandez has justified the renationalization of YPF, which was privatized in the 1990s, on the grounds of slack investment to boost oil and natural gas production that has failed to keep up with growth in Latin America's No. 3 economy.
Repsol denies under-investment, but her message has struck a chord with Argentines, many of whom are suspicious of foreign companies and blame the free-market policies of the 1990s for causing the dire crisis and debt default of 2001/02.
Speculation about a possible YPF takeover mounted in recent months after Fernandez lambasted the company for spiraling energy imports that are squeezing Argentina's prized trade surplus. The import bill doubled last year.
Fernandez's move on YPF drew a swift reprisal from Spain, which curtailed Argentine biodiesel shipments. Wall Street analysts warned that Argentina risks scaring off investment needed to bolster slowing growth.
This week, Bolivian President Evo Morales nationalized the local unit of Spain's Red Electrica Espanola, adding to the former colonial power's concerns about investments in the region.
While most of Fernandez's critics agree that YPF should be in state hands, some say her confrontational approach could harm the country's already tarnished reputation abroad.
Argentina has yet to return to global credit markets a decade since staging the biggest sovereign debt default in history and foreign direct investment has lagged many of its Latin American neighbors.
"It's a good move for the country because if the government does not control strategic resources such as oil, it loses power," said financial analyst Leonardo Rodriguez, 32, as he sipped a latte coffee in the well-heeled Buenos Aires neighborhood of Puerto Madero.
"But the approach used in taking over the company, without negotiating, was too jarring and authoritarian," Rodriguez said. "There could be serious consequences. I mean, who wants to invest in a country where the government expropriates private property from one day to the next?"
A survey published last month by polling company Poliarquia showed 62 percent of respondents agreed with the expropriation. This could boost Fernandez's approval ratings, which has slid since last year's election.
Once she signs the YPF bill into law, attention will turn to how much compensation Argentina will pay Repsol. Officials say it will be less than the $9.3 billion the Spanish company wants.
Analysts will also look for signs of how the government plans to manage YPF. Leading daily La Nacion on Thursday named an oil industry executive as a possible contender for the chief executive's job.
A gifted public speaker, the 59-year-old Fernandez has billed the YPF renationalization as central to her election pledges to deepen the interventionist policies began by her late husband and predecessor as president, Nestor Kirchner.
"The real custodians of his legacy are you," she told supporters at a rally last week in Kirchner's honor. "You will never permit a step backward."
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