Argentina sends second economic overhaul bundle

Argentina's government today unveiled its second massive package of legal and regulatory changes, including nearly 100 modifications to energy laws.

The bill, which President Javier Milei submitted to congress, includes 664 articles that will change hundreds of laws if approved. It follows an urgent decree published on 21 December to eliminate more than 300 laws and regulations.

The new bill includes changes to laws governing all forms of energy, as well as regulatory agencies. It also spells out president Milei's approach to the energy transition and climate change.

Prior to changes to specific laws governing the energy sector, the legislation provides some overarching changes including "an integrated and international vision of the energy sector" that allows for competition and expansion for electricity, oil, gas and biofuel markets.

It specifies that "butane, LNG, LPG and oil and its derivatives can be sold freely" without government restrictions.

Among the specific changes, Article 6 in law 17319 that governs hydrocarbons would prohibit the executive branch from intervening or setting prices for products at any stage of the production or retail cycle. The article previously stated that companies would need to comply with regulations set by the executive. The previous government established production criteria and prices from the wellhead to the service station pump. Retail price controls expired as Milei was taking office 10 December and have increased by 57pc so far.

In natural gas, it lifts all restrictions on imports in law 24076 and in biofuels changes how the state will work with companies that produce biodiesel and ethanol in law 27640.

Under the change, the government will come up with a new structure for fuel blending, but in the meantime sets blending mandates. It keeps the gasoline ethanol blend at 12pc, but increases to 7.5pc from 5pc the biodiesel blend.

The legislation proposes the creation of the new national gas and electricity regulator that will replace two separate entities, Enre for electricity and Enargas for gas.

The legislation includes five articles on energy transition, focused on the executive's role in controlling greenhouse gas emissions. It calls for the government to create mechanisms for carbon credits.

The bill doubles down on the need to privatize state-owned enterprises, including the oil company, YPF, electricity company, Enarsa, and nuclear power company, Enace.

The administration demanded that congress take up the bill immediately and took to social media to lobby for passage.

The government inherited inflation running about 150pc, an economy expected to contract by at least two points this year and deficits equivalent to 17pc of GDP.

By Lucien Chauvin