YPF buys gas distribution company Metrogas
BY TAOS TURNER
BUENOS AIRES -- YPF, has exercised an option to buy majority control of natural gas distributor Metrogas. "The goal of YPF's decision is to make Metrogas a more efficient and profitable company," YPF said in a statement without disclosing the price it paid.
The purchase comes just days after BG Group agreed to sell its stake in Metrogas to other investors, but that sale was subject to YPF's option to exercise its "first refusal" right to make a similar or superior offer for the stake.
YPF now indirectly holds a 70% stake in Metrogas through Metrogas's controlling company, Gas Argentino. Metrogas provides natural gas to around 2.2 million customers in and around the capital city of Buenos Aires. Through Metrogas, BG held a 35 year license to distribute gas in Buenos Aires. Like so many other energy utilities in Argentina, Metrogas has struggled to keep afloat over the past decade. It has suffered from the country's decade old freeze on utility rates. While rates have been mostly frozen since 2001, operating costs have surged amid high inflation, rapidly rising labor costs and soaring demand from consumers.
Metrogas consistently has reported losses in recent years, as have some other energy utility companies. But YPF officials are confident they can turn Metrogas around. They are also confident that YPF's relationship with the government, which is YPF's majority shareholder, will give YPF additional leverage in being able to make Metrogas profitable.
Dow Jones Newswires