After analyzing the operation of state-owned Energy Argentina S.A. (Enarsa), the General Audit Office (AGN) concluded that the Board of the firm "evidenced inadequate treatment of the issues included in the agenda and which make the development of social business."

It is that the control body reviewed 59 Proceedings arising from ENARSA’s Board meetings and deficiencies were observed in 25% of the total, that is, one out of every four. As an example, the report notes that "contractual documents are approved after they are signed or without stating the proper documentation to support such treatment" and adds: "In other cases, the information provided and carried the body documentation was not duly signed by those responsible and the areas involved."

A report by the Comptroller General's Office (SIGEN), adopted in 2008 on ENARSA also has similar observations on the functioning of the Board of the company.

Enarsa was established in 2004 and aims to explore and exploit solid, liquid and gaseous hydrocarbons by itself, through or with other partners. This includes transportation, warehousing, distribution, commercialization and industrialization of these products and their derivatives. It can also generate electricity.

The company has an Audit Committee which, by statute, will consist of three directors and the same number of alternates; all appointed by the Board and, as required, at least two of them must be "independent". With regard to this feature, there is a resolution of 2006 SIGEN saying that to be considered independent; a director must not perform executive functions. The report of the AGN, approved late last year, argues that the Committee, which was launched in August 2007, "the majority (of directors) had not provided necessary independence, because one of them is the General manager of the Company, another part of the project undertaken by ENARSA called 'Vientos de la Patagonia', and subsequently served in the Legal Counsel ". In both cases it comes to executive functions.

Bolivia

Since January 1st 2007, Argentina buys natural gas from Bolivia through a contract signed by the company Enarsa and Yacimientos Petrolíferos Fiscales from the bordering country (YPFB). That agreement, which is valid for 20 years, provides for the quantity and quality of the product to be delivered to YPFB so ENARSA then resells in the domestic market. And also it includes a clause which states that the Bolivian firm will compensate a lack of payment to an absence of supply.

The AGN reports that during the first two quarters of 2007 the supply of natural gas was "as agreed" but that, from the third quarter of that year "there is a substantial decline in delivery", which remains in the first quarter of 2008.

Against this background, ENARSA sent claims for payment of compensation under the contract, normalization of deliveries and the return of decreased volumes. Despite this, the report of the AGN states that the Argentine company "failed to enforce the guarantee of supply provided (in the purchase agreement)".

The company, meanwhile, responded to this observation of the Audit. clarified that, as the contract had been signed in the framework of concluded international commitments between the two countries following the notes of complaint sent to YPFB a series of meetings between the two companies "for the purpose of negotiating an addendum (Appendix started or annex) Contract that includes, inter alia, penalties and compensation for breach of contract ENARSA derived by YPFB." The company added that Argentina, in addition to technical staff of the two companies, the agreement "at the meetings of the National Executive Branch officials, mindful of the political and institutional genesis involved".