Fast Market Research recommends "Argentina Power Report Q2 2013" from Business Monitor International, now available

Boston, MA -- (SBWire) -- 03/12/2013 --BMI View: There has been some good news for utilities in Argentina this quarter, with the announcement that the government will permit an increase in electricity prices, in a move to encourage investment in electricity and natural gas infrastructure. However, this will not necessarily equate to an increase in profits, with the government having called for extra income to be channelled into a governmentadministered investment fund. Additionally, continued economic headwinds are set to negatively affect the power industry in 2013, particularly hindering power consumption.

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Argentina's power generation increased by an estimated 4.2% during 2012, underpinned by an estimated 4.0% rise in consumption. However, we expect electricity generation growth to slow to around 2.7% in 2013 as power demand wanes.

In terms of generation, thermal-based sources, primarily natural gas, remain the cornerstones of the electricity mix. Roughly 65% of electricity is currently generated from oil-, gas- or coal-fired power plants, with hydropower providing the next largest contribution, of 28%. Going forward, we expect this trend to continue, despite the government's efforts to diversify the electricity mix away from unreliable hydropower and costly thermal imports.

Key developments for Argentina's power sector this quarter include:

- The feasibility studies for the Garabi-Panambi hydroelectric project, which is jointly owned by Brazil and Argentina, will begin in early 2013.
- The Argentine government announced in January 2013 that it will award a contract to develop two hydroelectric plants in the country (the 1,140-megawatt (MW) Presidente Nestor Kirchner and the 600MW Gobernador Jorge Cerpernic projects) by the end of Q113.The contract will be awarded to one of five consortia interested in the project and construction is scheduled to commence in June 2013.
- General Electric announced plans in November 2012 to construct a thermal power plant in Timbues. The 800MW power station will cost US$770mn and is expected to be completed in two stages: the first phase will begin operations in June 2014, and the second phase in 2015.
- After several delays, the start-up date of the Atucha II nuclear power plant is scheduled for mid-2013. The US$2.46bn, 700MW plant was originally due to become operational in early 2012, with preparatory tests having begun in September 2011. After a decade of frozen tariffs, stocks of energy companies in Buenos Aires rallied in November 2012, following the Argentinean government's announcement that retail rates will be hiked to fund improvements for electricity and natural gas infrastructure. The money will be funnelled into a government-controlled fund.

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