Following the election of Javier Milei as President of Argentina, YPF’s shares on Wall Street jumped by 41.3%, marking a day of widespread increases in Argentine companies. However, privatizing the 51% of the share package held by the National State and producing provinces is not a straightforward process for Milei’s newly formed ruling party.
Milei has promised to revalue YPF before privatizing it, stating that it can be sold in a way that benefits Argentines. Experts emphasize that this operation is significant and that the expropriation law from 2012 needs to be repealed before any transaction can take place. To accomplish this, Milei must obtain authorization from Congress through a DNU (Decree of Necessity and Urgency) or another legal instrument, which would require approval from Parliament and create risk for potential buyers.
Before proceeding with any decision, Milei must also consider whether he will sell the entire package to a single buyer or sell shares on the stock market. According to YPF statutes, anyone who owns more than 15% of the shares must make an offer for the entire company and agree with 49% of private shareholders if they want to purchase it completely. If he chooses to sell shares on the stock market, there are additional regulations that must be considered.
The privatization of YPF is not without controversy; there have been ongoing legal battles related to its ownership since its expropriation in 2012 when it was controlled by Repsol. The company was compensated with US$5 billion to avoid trial in 2014 but was ordered to pay an additional US$16 billion in damages last September due to its obligation to launch a public offer for retail shareholders when it came under state control. The case remains open after being appealed.
Milei has several obstacles ahead of him before he can proceed with YPF’s privatization process: gathering majorities in both chambers of Congress to approve the repeal of the expropriation law, defining whether he will sell shares as a single package or on the stock market, and considering resistance from oil-producing provinces who rely heavily on YPF’s income as a source. Despite these challenges, experts believe that this move could boost economic growth and investment opportunities in Argentina if successfully executed.
Stock market analyst Sebastián Marill believes that “YPF represents an opportunity for foreign investment and growth in Argentina’s oil industry.” He notes that “privatization would allow greater efficiency in operations and increased competition among international companies.” Similarly, Javier Iguacel, former Secretary of Energy for Cambiemos under President Mauricio Macri, stated that “privatizing YPF would bring new investments into Argentina’s energy sector,” further boosting economic development.
In conclusion, while Milei faces significant challenges ahead in his bid to privatize YPF, experts believe that doing so could lead to increased foreign investment and growth opportunities for Argentina’s oil industry. By repealing expropriation laws and working with new allies like Javier Iguacel