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The Argentine government on Thursday said it will step in to supervise a debt restructuring at the country's biggest natural gas distributor, Metrogas SA (MGS, METR.BA), hours after the company filed for bankruptcy protection in local court.

"The goal of the intervention will be to restructure the company's debt and (the intervention) will continue until this has been done satisfactorily," the Ministry said.

Earlier, Metrogas said it could no longer wait for the government to allow it to raise its rates, which it said have been frozen for the past 11 years. The firm said it isn't able to raise enough cash to meet its debt payments.

The Planning Ministry dismissed Metrogas' argument that frozen utility rates were responsible for its precarious financial situation. Instead, the Ministry blamed Metrogas for mismanaging its debt and said this problem is unrelated to the country's utility rate policies.

Electricity and natural gas rates largely have been frozen since Argentina's 2001-2002 financial meltdown.

Since then many public service companies have struggled to remain profitable amid frozen rates.

BG Group (BG.LN) owns 54.7% of holding company Consorcio Gas Argentino Sociedad Anonima, while Spain's Repsol (REP) owns 45.3%. The consortium owns 70% of Metrogas, while 20% of the shares are traded publicly in Buenos Aires and New York, and 10% are held by employees.

-By Taos Turner, Dow Jones Newswires; 5411-4103-6728; taos.turner@dowjones.com