There will be no savings in the Fernandez government negotiation of the Union
Fenosa debt, according to research by the Energy Commission of the PRD, which says that once interest payments are added on the country will end up paying a similar amount over ten years to what the former Mejia administration had already negotiated, and the PLD and Fernandez government officers had much criticized. The PRD government renegotiated the debt to pay US$586.8 million over ten years. The Fernandez government has now agreed to a payment of US$570 million at the end of the ten years, with an immediate cash payment of US$300 million to Union Fenosa, and taking on of sovereign debt at 9% for ten years. The commission says it is not true that savings of US$300 million have been secured. Making matters worse, as reported in Hoy newspaper, reports that for 2.86% to 22% savings (depending on the yield of the bonds), the government will assume the financial risks of the debt and frees Union Fenosa from these responsibilities. The commission states that what the government has not mentioned is that at present the Union Fenosa debt is commercial, with the risks that are involved, and are therefore taken on by Union Fenosa. For instance, if the distributors go bankrupt, then Union Fenosa would have lost its capital. With the new deal negotiated in Spain, Union Fenosa is the big winner. The government, with the approval of the multilateral financial organizations (World Bank, IDB, AID, IMF), converts the commercial debt to sovereign debt and is fully responsible for its payment. The PRD commission warns that this would unnecessarily increase the country’s sovereign debt.
The key negotiator for the government, Julio Ortega, at the time chief of economic advisors to the President, recently was appointed ambassador at the service of the Ministry of Foreign Relations.