The National Administration of Fuel, Alcohol and Portland (Ancap) it will take financial debt for up to 300 million dollars to sustain the macroeconomic health of the state company during the scheduled shutdown in The Tile, the main refinery of Uruguay.
In September, and for four months, the La Teja refinery will stop working completely. The objective is to carry out maintenance tasks and replacement of part of the equipment. This will mean a loss of 180 million dollars for Ancap, for which its board of directors approved the taking of debt to sustain the financial balance of the company
This financing will be used “to the extent that the evolution of the macroeconomic variables that impact the company and future price adjustments to the public warrant it”; therefore, it will not necessarily be taken on a single occasion and for the entire authorized total of 300 million dollars. But Several calls may be made to obtain funds and its execution could be in sections until the limit is completed, prior authorization from the Executive Power.
The need for Ancap’s borrowing
Currently, the La Teja refinery is one of Ancap’s main sources of income, to the point of also being the pillar that supports fuel prices in the countrythanks to the excellent margins They allow financing —through a kind of subsidy, as long as it covers the costs that are not transferred to the final consumers— the rate differences in the pumps with respect to the reference prices.
In this sense, during the four months that the plant is in technical shutdown, the state oil company estimates that it will lose between 180 and 200 million dollars. To this is added the investment needed for work during those months: it is expected that the total cost of the acquisition of new equipment and the execution of maintenance work will amount to approximately 77 million dollars.
On this, in addition, it should be considered that Ancap will import 600,000 cubic meters of fuel to satisfy the internal demand for this product while La Teja is on a maintenance stoppage. While the purchase of refined products is financed at a 30-day term —and not 90, as is the case with crude oil purchases—, the need for working capital increases if you want to cover the loss of days of financing with suppliers, for what is estimated a amount of 237 million dollars for it.
This flow of funds projected for 2023 showed the need for additional funds, so the company’s board of directors approved the possibility of taking on debt and that the effects of the exceptional event are not so profound.
Indebtedness, in the midst of pesification
The possible taking on debt occurs in a context in which Ancap is working on its finances with the aim of pesify the total of its debt —which amounts to 198 million dollars—, particularly with the CAF-Development Bank of Latin America as first step.
This is because the company is exposed to the exchange rate volatilitymainly due to the devaluation of the dollar, and it needs to limit the risks of this situation that is generated by having liabilities in US currency but income in local currency.
Ancap has been in a progressive process of pesification of its debt for years after reaching 623.5 million dollars in 2016. liability restructuringSince then, it has been carried out with short-term instruments in pesos and Indexed Units (IU).
In this sense, it will be necessary to see if the state oil company takes into account its own strategy when seeking external financing or if it will prioritize easily covering its capital needs.
Source: Ambito
