CONSUMERS-ARGENTINA: Tempers Over Outage Reach Boiling-Point

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Feb 19 1999 (IPS) - The indignation of around 250,000 residents of the capital of Argentina had soared by Friday, the fifth day of a power cut by a privatised company that may be taken over on grounds of inexperience.

The social tension had soared so high that the cabinet of ministers met Friday to decide whether to withdraw the concession from Edesur, which provides electricity to roughly half of the residents of Buenos Aires, or around five million people.

Since the start of the power failure late Sunday night, the company has repeatedly failed to make good on promises to resolve the problem. The last reports were that the outage could stretch to Sunday.

Edesur, comprised of two Chilean companies, Enersis and Electra, and Argentina’s Perez Companc, remained closed Friday and under police protective custody. Since 1992, it has been providing a monopoly service to half of Buenos Aires.

A federal court ordered a search of the company Friday, as well as of the Secretariat of Energy and the electricity regulatory corporation, accused of failing to oversee privatised public services.

The regulatory body – accused by consumer defence groups of being an “extension of the companies,” and looking out for their interests before those of consumers – said it was considering taking over the company, because the fines it plans to impose already exceed 20 percent of the firm’s annual billing.

According to the conditions of Edesur’s contract, the company must indemnify users for power cuts that last more than 10 hours, but without compensating for lost profits.

But Guillermo Sucal, with the Consumer Defence Association (Adelco) told IPS that the ordinance only covered “normal power cuts.” He has urged businesses to sue for lost revenues.

The contract also stipulates that if the fines exceed 20 percent of billing, the contract can be cancelled.

Protesters who took to the streets Thursday and Friday complained that elderly residents in a number of high rises were without light, water and elevators during a week of temperatures that had averaged 35 degrees celsius, and soared at times above 40 degrees.

Since late Sunday night, around 250,000 people have been without refrigeration for their food, without air conditioning or fans, and without water and plumbing.

The city government, headed by Fernando de la Rua, has been providing emergency health and civil defence services to the elderly.

The outage has also affected parliament – some of whose members have been meeting in nearby bars, as they are unable to use the bathrooms or elevators in Congress – and the Central Department of the Federal Police.

Associations of small and medium-sized businesses plan to sue for 750 million dollars in lost revenues and the cost of perishable goods.

But Edesur’s director of Institutional Relations, Daniel Martini, said the company was not obligated to compensate for lost revenues caused by power failures.

He added that the service provided by Edesur would not be economically “viable” if the company had to pay hundreds of millions of dollars in compensation.

Edesur does a total turnover of one billion dollars a year.

Since Thursday, local residents and shopkeepers in the 10 neighbourhoods affected by the power outage have been demonstrating in the streets. On Friday they set fire to a vehicle in a neighbourhood near parliament.

The presence of Chilean capital in a monopoly business providing public services was one of the biggest complaints. “We sold part of the country to the Chileans, and now they leave us without light,” said one protester.

Daniel Martinez, an engineer who worked for the electric company under both the state and Edesur, said that part of the firm’s technical problems were due to the dismissal of thousands of skilled Argentinian workers and professionals.

He pointed out that Edenor, the Spanish and French consortium awarded the contract for supplying electricity to the other half of the city, had retained the best workers.

Politicians and government officials are also indignant over the blackout, which has left a number of intersections without stoplights since Monday, causing chaos, which has been aggravated by the demonstrations.

Vice-President Carlos Ruckauf declared Friday that the company’s contract should be revoked and a new tendering held, because Edesur had demonstrated that “it is not in conditions to provide the service.”

Ruckauf said Edesur had tried to cut off his electricity supply a month ago as the payment of his last bill, carried out before the deadline through a public bank, had not been registered.

The governor of the province of Buenos Aires, Eduardo Duhalde, who is seeking the presidential candidacy of the governing Justice Party, said the problem was due to the company’s “complete lack of experience.”

Since President Carlos Menem first entered office in 1989, some 20 billion dollars have been brought into public coffers through the privatisation of public enterprises.

But consumer complaints, mainly about abusive rates, have run high. The companies providing public services privatised this decade operate in captive markets – 80 percent are monopoly services.

Meanwhile, 64 percent of the revenues earned in 1998 by the 100 largest companies operating in the country came from privatised public services, according to the governmental Centre for Production Studies.

From a technical point of view, however, most clients had been pleased with the improvements seen since privatisation.

But by Friday people were beginning to wax nostalgic about old times, when the state-run Electric Services of the Greater Buenos Aires carried out scheduled outages because at times of heavy demand it had to save energy. No power failure had ever lasted this long.