A massive blackout that left 50 million people without power in Argentina, Uruguay, and some parts of Paraguay has raised concerns about the strength of Argentina’s power infrastructure and the political future of incumbent President Mauricio Macri.
Officials restored power to most of the system by the late evening of 16 June, but the power cut disrupted water services and delayed gubernatorial elections in Argentina. Transit systems were brought to a standstill and citizens were asked to ration water. Across most of the southern cone of South American, social media users posted videos and photos of dark towns and cities with the hashtag #SinLuz, or “without light” in English.
The cause of the unprecedented blackout remains under investigation, with Macri announcing on Twitter that “a fault in the coastal transmission system” caused the power outage. Authorities are reviewing the extent of the damage and the investigation is expected to take at least two weeks.
Argentina is used to occasional blackouts, but this massive blackout was on a scale that shocked most in a country where ower services are normally cut during high-service months. The hit comes as the country is in the midst of a major economic and political crisis that where the poverty rate has increased by 33% and inflation continues to soar.
The blackout comes shortly after Macri cut government subsidies for power in order to increase external investment in the sector. While electricity prices have increased by 600%, the country’s power infrastructure still isn’t up to speed and may scare off any potential energy investors.
Macri is only four months away from an election that is guaranteed to be close. He will likely have his fate determined by the way he handles the post-blackout investigation.
“Power rates were increased as much as his friends wanted and they resulted in the greatest power outage in Argentine history. This isn’t Venezuela. It’s Argentina. And it’s time to realise this,” Alberto Fernandez, Macri’s main rival, said via Twitter.
Argentina’s energy sector is a risky target for foreign investors, even though the country is South America’s second largest energy consumer. After years of government subsidies and nationalised services, the now-privatised energy sector has plenty of energy generation and distribution potential but the power systems are in dire need of a major transportation upgrade.
Italy, Spain, and France are the three major European investors in the economies of both Argentina and its far smaller neighbour, Uruguay.
Private investors in the three countries may be reconsidering putting further money into Argentina in light of the wide-scale power outage, especially since officials have yet to determine how to prevent another major power incident.
Stores and business across the Rio de la Plata region were forced to close down during in the immediate aftermath of the blackout. causing small and medium-sized businesses to lose millions of euros in sales. If payment terminals, lights, and cash registers are forced to shut down again, it would be another major hit to Argentina’s fragile economy, while at the same time scare off the sort of external investors that Macri has been trying to attract since he first took office in December 2015.