• Mon. Dec 11th, 2023

Decoding Milei’s Strategy: A Comprehensive Guide


Nov 21, 2023

In a significant development, the newly elected President Javier Milei has announced his intention to privatize YPF. Following his announcement, shares of the oil company on Wall Street jumped by 41.3% in a day marked by widespread increases across Argentine companies. However, the privatization process may not be as straightforward for Milei’s ruling party as he must first obtain authorization from Congress to transfer shares to the private sector.

According to Rabinovich, Milei could potentially use DNU (Decree of Necessity and Urgency) to transfer shares to the private sector but it depends on the political strength at any given time. Anyways, DNU must be subsequently approved by Parliament which implies a risk for potential buyers. Furthermore, Rabinovich emphasized that before privatizing YPF’s 51% share package held by the National State and producing provinces, Milei must first revalue its value for what “They can be sold in a very beneficial way for Argentines.”

The process of privatizing YPF is not without its challenges. Firstly, Milei needs to gather majorities in both chambers of Congress to approve the repeal of the expropriation law. The number of own seats that will count starting in December is still unknown beyond the explicit support achieved from Mauricio Macri, Patricia Bullrich and PRO’s hard wing during runoff elections.

Moreover, among Milei’s new allies is former Secretary of Energy Javier Iguacel who sounds like he will lead this new YPF privatization project. If history serves as any indication, it was approved unanimously during Menem’s first government when YPF became a Public Limited Company and granted privileges to increase its value. Later on in 1992 Repsol bought 85% of YPF shares for almost US$ 13 billion while Kirchnerism backed Petersen group took 14.9% with the mission of “Argentinizing” and commanding YPF’s destinies for leading exploration and exploitation activities related to oil and gas resources in Argentina

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