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Milei surprises with first privatization: IMPSA is sold to an American company for R$164 million, generating debates and expectations about the future of the Argentine economy

Written by Deborah Araújo
Published 17/01/2025 às 09:52
Milei surprises with first privatization IMPSA is sold to American company
Photo: Facebook/ Javier Milei

Historic privatization in the Argentine government: Milei sells IMPSA to a US company for R$164 million, generating controversy and expectations about the impact on the Argentine economy and future reforms.

The Argentine government, led by Javier Milei, has announced its first major privatization: the sale of IMPSA to the US company ARC Energy for R$164 million. The transaction, which includes the acquisition of 84,9% of the shares controlled by the State and the province of Mendoza, marks the beginning of Milei's liberal economic agenda. Let's understand how this decision impacts the Argentine economy and the future of the company.

What is IMPSA and why did the Argentine government decide to sell to the US company?

Founded in 1907 by the Pescarmona family, IMPSA is one of the main metallurgical and energy companies in Argentina, with a strong presence in hydroelectric power projects, wind farms and nuclear energy.

Despite its relevance in the sector, the company faced years of financial crisis, aggravated by problematic contracts in Brazil and Venezuela, leading to its nationalization in 2021, during the government of Alberto Fernández.

Now under the command of Javier Milei, IMPSA is being privatized as part of a strategy to attract international investment and revitalize the economy. The sale was made for R$164 million, with ARC Energy also assuming a debt of US$576 million (about R$3,5 billion).

The sale to ARC Energy

Louisiana-based US company ARC Energy was the only one to submit a bid to acquire IMPSA. Despite this, the government and the province of Mendoza demanded adjustments to the initial offer before approving it.

The transaction includes an immediate investment of US$7 million (R$42,7 million), with the remainder of the amount to be disbursed throughout 2025. ARC Energy also committed to investing in strategic contracts and retaining the 660 employees at its headquarters in Mendoza.

What does privatization mean for Argentina?

The sale of IMPSA signals the beginning of a series of economic changes promised by Javier Milei, which seeks to reduce the role of the State in the economy and attract foreign capital. This privatization also comes at a time when Milei is strengthening ties with the United States, evidenced by her recent trip to attend Donald Trump's inauguration.

For Argentina, the goal is not only to save IMPSA but also to position it in the global market under more efficient management. ARC Energy plans to expand operations, notably by replacing Chinese cranes in American ports, a move that could gain momentum with Trump’s return to power.

The challenges and opportunities of selling

While the privatization of IMPSA brings hope for a brighter future, the process faces some challenges. The transfer of shares, scheduled for February, depends on the renegotiation of the company’s debt and the agreement of creditors such as Banco Nación and the IDB. Existing contracts with the Ministry of Defense and state-owned YPF need to be revised to ensure the company’s financial viability.

On the other hand, ARC Energy sees a opportunity to transform IMPSA into a strategic partner in the United States, exploring the renewable energy and infrastructure market. The revitalization of IMPSA could also attract more international investors, a crucial step for Argentina’s economic recovery.

A new era for the Argentine economy?

The privatization of IMPSA reflects Milei’s vision for Argentina’s economic future: a more liberal model with less state intervention and greater openness to the external market. However, this approach is controversial, especially in a country where past privatizations have not always been successful.

The decision also has political implications, as it reinforces Milei’s ties to the United States and Donald Trump. For many, the sale of IMPSA is a test of the government’s economic agenda and a signpost for how other privatizations might be conducted in the future.

With the sale of IMPSA, the Argentine government is seeking to show the world that it is open to business and willing to implement deep economic reforms. ARC Energy, on the other hand, has the mission of revitalizing a historic company and exploring new markets.

Whether the privatization will be a success or not, only time will tell. But one thing is certain: the sale of IMPSA marks the beginning of a new economic era for Argentina, one that promises change, challenges and, who knows, new opportunities for the country on the global stage.

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Idvani Monte Verde de Noronha
Idvani Monte Verde de Noronha
17/01/2025 13:38

Milei is on the right track. The previous gang ruined the country, like every communist, populist gang. Now, an honest man will lead his people to the social well-being they deserve... unlike the one here, who has already torn Brazil apart AGAIN!!!

Toledo, Long-Tailed Manakin
Toledo, Long-Tailed Manakin
In reply to  Idvani Monte Verde de Noronha
17/01/2025 13:51

Here in Brazil, privatizing a state-owned company like Correios is not welcome, since it would avoid the **** robbery with 800 ministries to eliminate corruption in all possible sectors.

Jamie Lawson
Jamie Lawson
In reply to  Toledo, Long-Tailed Manakin
17/01/2025 15:16

Since cities in the interior would have their agencies closed.

Deborah Araújo

I write about renewable energy, automobiles, science and technology, industry and the main trends in the job market. With a close eye on global developments and daily updates, I am dedicated to always sharing relevant information.

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