Argentina and Brazil renew agreement to exchange electricity with local currencies

Argentina y Brazil signed on Thursday a Memorandum of Understanding (MOU for its acronym in English) that enables the use of the currencies of both countries for the exchange of electrical energy, the Argentine Ministry of Energy said in a statement.

The Minister of Energy of Argentina, Flavia Royon, and the Vice Minister of Mines and Energy of Brazil, Hailton Madureira de Almeida, signed the agreement in Buenos Aires for Argentina to import electric power from the neighboring country in the winter and thus avoid importing liquid fuels for generation, which are more expensive.

The parties aspire to sign the contracts in the medium term.

“In this way, our country will be able to supply itself with a fundamental energy source without resorting to the outlay of foreign currency,” the ministry said in the statement.

Argentina, after years of financial crises, is seeking to protect scarce central bank reserves, which have been hit by rising energy imports. This year it is expected that Argentina will register a deficit in its energy trade balance of about 5,000 million dollars.

The memorandum is an update of the agreement signed in 2019 that expires at the end of the year. The new one will be in force until December 31, 2025 with the possibility of extension for another four years.