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DE RUEHBU #1456/01 2081921
ZNR UUUUU ZZH
R 271921Z JUL 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 8760
RUCPDOC/USDOC WASHINGTON DC
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUEHAC/AMEMBASSY ASUNCION 6401
RUEHCV/AMEMBASSY CARACAS 1376
RUEHMN/AMEMBASSY MONTEVIDEO 6613
RUEHSG/AMEMBASSY SANTIAGO 0623
RUEHBR/AMEMBASSY BRASILIA 6263
RUEHLP/AMEMBASSY LA PAZ JUL SAO PAULO 3445
RUEHRI/AMCONSUL RIO DE JANEIRO 2286

UNCLAS BUENOS AIRES 001456 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
WHA/EPSC FOR FCORNEILLE 
ESC/IEC/EPC FOR MCMANUS,JIZZO 
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER 
TREASURY FOR LTRAN 
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE 
PASS USTR FOR EEISSENSTAT 
US SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: ECON EINV ENRG EPET EAIR BEXP AR
SUBJECT: PLANNING MINISTER DE VIDO ON ENERGY CRISIS AND 
INFRASTRUCTURE INVESTMENT 
 
REF: (A) Buenos Aires 1436 
     (B) Buenos Aires 1415 
     (C) Buenos Aires 1068 
     (D) Buenos Aires 880 
 
 
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Summary 
------- 
 
¶1. (SBU) Argentina will successfully weather current and future 
energy shortages, according to Planning Minister De Vido, via a 
combination of short term fixes (including imports of Brazilian 
electricity and GoA subsidies for the import of diesel fuel for 
generators), plans for a post-election national conservation program 
to save 1,000 MW annually, medium term plans to incorporate 1,800 MW 
of new state-run thermal generation capacity in 2008/9, and longer 
term plans to add new hydro and nuclear generation capacity to the 
national grid.  Before this new capacity comes on line, De Vido 
said, there may be "risky" periods where domestic demand may not be 
fully met, but no "critically risky" periods that would imperil 
national production.  The GoA has developed a (not yet public) long 
term "Bicentennial" national infrastructure that spans the gamut of 
domestic energy, road, and rail development along with regional 
transportation and energy integration with Argentina's Southern Cone 
neighbors.  A final GoA decision on adopting an HDTV standard should 
be made soon after October elections.  President Kirchner should 
shortly sign airport concession management legislation that will 
reduce operating costs for U.S. carriers.  End Summary 
 
----------------------------------- 
Measures to Deal with Energy Crisis 
----------------------------------- 
 
¶2. (U) In a July 23 meeting with Ambassador, Planning Minister and 
Presidential confidant Julio de Vido De Vido reviewed current GoA 
initiatives to address the nation's energy crisis, including the 
"Total Energy" plan (Ref B) to temporarily boost electricity imports 
from Brazil and to boost domestic thermo-electric generation by 
subsidizing, at a cost of US$300 million over three months, the use 
of diesel fuel by electricity generators to free up some 5.8 million 
cubic meters of natural gas for industry and residential heating 
use. 
 
¶3. (U) De Vido also provided background on his July 19 announcement 
of Decree 938/2007 which provided for the tender of 7 gas and diesel 
electricity turbines by state-owned energy company ENARSA to provide 
Argentina 1,800 MW of additional power at a rough cost (according to 
local media) of US$ 1 billion.  Tenders will be issued in early 
August and awards made in October for ambitious delivery dates of 
December 2007 through May 2008, to come on-line in 2008/9.  Turbines 
are to be installed in five generation sites in Ensenada, Campana 
and Necochea, all in Buenos Aires province.  Two additional turbines 
will be installed in Santa Fe and in Cordoba provinces.  (Note: 
Separately, on July 20, President Kirchner and Senator Christina 
Kirchner announced the construction of two state-owned hydroelectric 
stations on the Santa Cruz river at a cost of $1.5 - 2 billion.  End 
Note).  De Vido said that Siemens has already offered to provide 
these seven gas and diesel turbines within an 6-11 month delivery 
window, versus a 30 month norm for the industry.  Nevertheless, 
after the Ambassador asked about participation by U.S. companies, he 
offered that the GoA is quite open to "diversifying its risk" with 
competitive bids from G.E., Alstrom, and Toshiba.  He praised the 
performance of electricity turbines provided by GE Canada in a 
generating facility in Santa Cruz province.  (Note:  GE told us 
separately that it is unlikely that they can meet the delivery 
timeframe required and that they believe it unlikely Siemens will be 
able to meet the timeframe for all the plants, even if they say they 
can.  End Note). 
 
¶4. (SBU) Before this new capacity comes on line in the coming years, 
 
 
there will be "risky" periods where domestic generating capacity 
will be strained, De Vido said, especially when temperatures fall 
below 10 degrees centigrade. But there will not be "critically 
risky" periods ahead that would put national production at risk, he 
assured.  He attributed recent nationwide energy shortages (Ref B) 
to "the coldest June in 50 years."  With the incorporation of 
planned new thermal and hydro capacity in the coming three years 
along with planned incorporation of Atucha II, a new 700 MW nuclear 
facility in Buenos Aires province in 2011, De Vido said, Argentina 
will have "turned the corner on energy infrastructure." 
 
¶5. (SBU) In response to the Ambassador's question on a dearth of GoA 
energy conservation efforts (Ref B), De Vido said a comprehensive 
plan to save roughly 1,000 MW/day will be rolled out following 
October elections.  This conservation plan will include 
GoA-subsidized programs to allow consumers to trade in energy 
inefficient white goods (refrigerators first, air conditioners 
second) for more efficient models.  GoA subsidies will also be 
provided to bring prices of energy efficient lighting to more 
affordable levels. 
 
¶6. (SBU) Finally on energy, De Vido noted that President Kirchner 
had been pleased to meet with senior Apache Energy officials earlier 
this month (Ref C), especially given the company's commitment to 
re-invest up to $9 per barrel of oil recovered in Argentina, vs. an 
industry average of $3 re-invested per barrel. 
 
------------------------------------------- 
"We Have A Broad Public Infrastructure Plan" 
-------------------------------------------- 
 
¶7. (SBU) In response to the Ambassador's question on the 
infrastructure development plans of Presidential front-runner 
Senator Christina Kirchner, De Vido explained that the GoA has 
already developed a long term national infrastructure plan -- a 
"Bicentennial Plan" (in honor of the upcoming 2010 200th anniversary 
of Argentina's declaration of independence) that spans the gamut of 
domestic energy, road, and rail development along with regional 
transportation and energy integration with Argentina's Southern Cone 
neighbors. 
 
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HDTV 
---- 
 
¶8. (SBU) Ambassador noted that the Advanced Television System 
Committee (ATSC) would hold a technical workshop in Buenos Aires 
July 25 to promote the technical superiority of the U.S. high 
definition TV standard.  De Vido offered that a final decision would 
likely not be made before October elections and may not be made 
until the new President takes office. 
 
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Civil Aviation 
-------------- 
 
¶9. (SBU) The GoA is pleased, De Vido said, at the signing of an 
updated bi-lateral civil aviation accord that will allow for a 
gradual doubling of flight frequencies between the U.S. and 
Argentina.  Ambassador noted that U.S. carriers are already applying 
to U.S. government authorities for new routes that will help build 
tourism and commercial ties between our nations.  Ambassador also 
noted that a bill passed by parliament two months ago to 
re-configure the Aeropuertos 2000 national airport management 
concession has been pending the President's signature for some time. 
 U.S. carriers are eager to see this bill become law as it 
incorporates significant aircraft parking and terminal rental fee 
reductions they had long been seeking.  De Vido said that the 
President should be signing the bill within a matter of days. 
 
--------------------------------- 
 
 
Information Technology Roundtable 
--------------------------------- 
 
¶10. (SBU) Ambassador noted that feedback from U.S. companies who 
attended the May 23 information technology roundtable co-hosted by 
the Ambassador and Minister De Vido was very positive and provided 
De Vido with a U.S./GoA pubic-private partnership vehicle to promote 
higher education and research.  Participating companies agreed that 
Argentina is one of their strategic regional locations to develop 
and guarantee their global competitiveness in IT services. 
 
WAYNE