MONTEVIDEO – Uruguay’s Senate has approved the government’s plan to recapitalize state oil company Ancap by writing off the firm’s $580 million debt to the Economy and Finance Ministry.
The bill was immediately sent to the House of Representatives for final approval of the recapitalization, the centerpiece of a set of measures devised by the government to shore up Uruguay’s leading enterprise.
Additionally, the government has sought a $250 million loan from the CAF-Development Bank of Latin America to reduce Ancap’s heavy dependence on private lenders, according to the Economy and Finance Ministry.
The government’s intervention in Ancap, whose total debt tops $800 million, does not include the removal of current top executives, but does entail the creation of a team with officials from the Economy and Industry ministries and the Planning and Budget Office to work closely with the company board.
Ancap must be “rethought and restructured,” and its relationship with the overall market needs to be reviewed, Industry, Energy and Mining Minister Carolina Cosse said earlier this year.
Ancap, a maker of petroleum products, Portland cement and alcoholic beverages, ended 2014 with a net loss of $323 million.
In 2013, the company, which has a local monopoly on oil and gas refining and distribution, posted a net loss of $170 million.
Ancap’s board has blamed the company’s widening net loss on factors such as fluctuations in the value of the Uruguayan peso relative to the dollar and investment spending during the 2010 to 2014 period.