The newly elected president of Argentina, Javier Milei, has stated his intention to privatize YPF, the country’s state-owned oil company. This announcement led to a 41.3% increase in YPF’s shares on Wall Street in one day, as investors showed interest in the potential privatization process. However, there are several obstacles that Milei and his ruling party must overcome before the privatization can proceed.
Firstly, Milei must obtain authorization from Congress to transfer shares to the private sector. While he has promised to revalue the 51% of the share package in the hands of the National State and producing provinces for “what they can be sold in a very beneficial way for Argentines,” experts emphasize that this is an important operation and that it is necessary to repeal the expropriation law from 2012 when YPF was controlled by Spanish company Repsol.
Milei will need support from both chambers of Congress to approve this repeal, as well as cooperation from other stakeholders such as oil provinces and industry leaders. There may also be resistance from certain sectors who are opposed to privatization or who view YPF as a strategic national asset that should remain under government control.
Furthermore, if Milei decides to sell the entire package of shares on the stock market rather than selling them all at once to a single buyer, he will need to ensure that anyone with more than 15% of the shares makes an offer for the entire company and agrees with at least 49% of private shareholders. This requirement is set out in YPF’s statute.
Despite these challenges, Milei has expressed confidence in his ability to advance the privatization process through DNU (Decree of Necessity and Urgency), but he recognizes that this option carries risk for potential buyers. Whatever decision he makes, it will have significant implications for Argentina’s energy sector and its economy more broadly.