The restructuring and privatization of the Argentine gas industry was an extraordinary event. Over a comparatively short time period, a unified, government-owned firm (Gas del Estado) was broken into 10 components, major primary legislation was completed, a regulatory agency was formed, and a sale finalized. In a stroke, the transport/distribution segment of the industry leapt to the forefront of the world’s gas transport and distribution industries in structure, pricing, and potential for competitiveness and efficient regulation.

Digesting that rapid transformation took time and great effort on the parts of both the industry’s new private participants (drawn from around the world) and its new regulator, ENARGAS. As the transport/distribution industry’s 10 newly-privatized companies and ENARGAS moved through their initial period of operation and interaction (under the new law and operating licenses), there were inevitable details, problems, and tensions to work out. In this report, NERA Senior Vice President Dr. Jeff D. Makholm focuses on three such areas where the economic literature and the experience in other countries’ gas industries, commercial practices, and regulatory structures provide a guide to the resolution of these issues.