Uruguay approves bailout of ANCAP state oil concern.
Disagreements in the ruling Broad Front (FA) coalition were overcome yesterday as Uruguayan lawmakers voted in a special emergency session to approve an US$872 million aid package for state oil company ANCAP, as part of a push to shore up the firm’s finances. The 99-seat Lower House of Congress approved the legislation during a 14-hour marathon special session on Saturday, with 50 members of the Broad Front backing the bill despite some reservations in the ruling coalition. Only 89 lawmakers were in attendance; members of the opposition all opposed the bill.
The bill would recapitalize the state-owned oil company, which has a monopoly on importing and refining oil in Uruguay and has sidelines in alcoholic beverages, perfumes and cement, by writing off US$622 million of debt the company owed to the Economy and Finance Ministry. The government has also secured a US$250-million loan from the CAF Development Bank of Latin America on the company’s behalf to reduce its dependency on private lenders. The legislation has already been approved by the Senate, and the bill will now be sent to President Tabaré Vázquez for his signature.
ANCAP, Uruguay’s largest company of any type, is instituting a cost-cutting plan after ending 2015 with US$200 million in the red. ANCAP lost US$170 million in 2013 and US$323 million in 2014.
Lawmakers argued in Congress about whether the plan to bailout ANCAP should include demands that top company executives be removed from their posts; but the final package did not include such a measure. The company’s huge debt load has also created rifts in the governing left-wing Broad Front coalition, with many former allies blaming each other for the company's woes.
Current Economy Minister Danilo Astori, his allies in the Broad Front, and several businessmen have publicly blamed the company’s losses on mismanagement by former President José Mujica’s administration. Astori has also accused current Vice-President Raúl Sendic, a former head of ANCAP, of being partly responsible.
Mujica and Sendic, in turn, countered that it is in fact Astori (Mujica’s former VP) who is to blame, saying that he and his aides have run the company since 2005, when the Broad Front came to power.
Broad Front Deputy Darío Pérez avoided the intra-party criticism, demanding instead as the opposition did that ANCAP’s board resign. He called for an “act of contrition” involving “real repentance.”
At: http://buenosairesherald.com/article/206009/uruguay-approves-ancap-bailout