Edenor Jumps on Electricity Rate Increase: Buenos Aires Mover
Empresa Distribuidora & Comercializadora Norte SA (EDN) rose after two Argentine officials announced that the government will allow electricity and gas distributors to increase rates frozen since 2007.
Edenor, as Argentina’s largest electricity distributor is known, gained 9.6 percent to 0.663 peso at the close in Buenos Aires after Planning Minister Julio De Vido and Economy Deputy Minister Axel Kicillof announced that residential and commercial consumers will be charged with bimonthly fixed rates of as much as 300 pesos ($62).
Authorities will adjust rates to invest in infrastructure projects, Kicillof said. Two trustees will manage electricity and gas revenues coming from the increase, Kicillof said. The government wants to collect 2 billion pesos per year for gas and electricity investments, De Vido said.
“Edenor will benefit from the increase because this money will alleviate its operational results,” Daniela Cuan, a Moody’s Investors Service analyst in Buenos Aires, said in a telephone interview. “It doesn’t matter that proceeds will be managed by the government, the increase will mean more cash for the distributors.”
Cuan said she hasn’t been able to project figures to determine how much the increase will benefit Edenor or Metrogas. “The companies are getting a mechanism that will help their cash generation and is the first concrete increase in many years that will indeed change its complicated situation.”
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