Following the election of President Javier Milei, YPF’s shares on Wall Street jumped by 41.3% in a day of widespread increases in Argentine companies. However, privatizing the oil company looks like it will not be an easy task for the new ruling party.
Milei has promised to revalue the value of the 51% share package before selling it to private investors. However, experts say that this is an important operation and that in principle, the expropriation law must be repealed from 2012 when YPF was controlled by Repsol. To authorize this transfer of shares to the private sector, Milei must obtain approval from Congress. This could be done through a Decree of Necessity and Urgency (DNU) or through other means, but either way, it must be approved by Parliament as well.
The DNU has risks for potential buyers since it implies that Congress can overrule any decision made under its authority. Additionally, YPF is subject to certain rules regarding share ownership and sale that must be taken into account before making any decisions regarding privatization. According to Rabinovich, anyone who owns more than 15% of YPF’s shares has to make an offer for the entire company and agree with 49% of private shareholders.
Before making any decisions regarding privatization, Milei must also consider the political climate in Argentina. The number of seats that his party will have in Congress starting in December is still unknown beyond what he achieved during his runoff against Mauricio Macri and Patricia Bullrich. He will need support from other parties as well if he wants to advance his plans for YPF’s privatization process successfully.
One obstacle that Milei may face is resistance from oil-producing provinces since they rely heavily on YPF as a source of income. The two previous times that this issue went through Congress (to privatize or expropriate), it was approved unanimously. However, with new allies such as former Secretary of Energy Javier Iguacel leading this project, Milei may have better chances of success than before.
In conclusion, President Javier Milei’s plan to privatize YPF may face obstacles due to various factors such as legal restrictions and opposition from oil-producing provinces or other stakeholders who rely on YPF as a source of income or power. It remains to be seen how successful Milei will be in advancing his plans while balancing these challenges effectively.
YPF has been an important part of Argentine history since its establishment in 1927 and played a significant role in shaping the country’s energy sector over the years. Its nationalization by the government under Minister Axel Kicillof was controversial at the time but led to increased control over natural resources and revenue generation for Argentina’s state coffers.
However, some argue that nationalization hindered investment and innovation in Argentina’s energy sector while others believe it allowed for greater social responsibility and environmental stewardship.
As such, any decision regarding YPF’s future ownership structure raises questions about balance between economic growth versus national control over natural resources.