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30 to 40 percent gas tariff hike announced by Government of Argentina

A Metrogas customer who demands little gas will go from paying USD 500 per month to about USD 670.

Devdiscourse News Desk
Updated: 28-03-2018 15:45 IST
30 to 40 percent gas tariff hike announced by Government of Argentina

The government's road map includes the complete elimination of subsidies for electricity and gas. (Image credit: Wikipedia)

The regulator of gas (Enargas) defines the new rate schedule that will apply from April 1. As of Sunday, the consumption of gas in homes will be between 30 percent and 40 percent more expensive in relation to what was paid until now, according to industry estimates.

A Metrogas customer who demands little gas will go from paying USD 500 per month (March price) to about USD 670 every 30 days, according to estimates they manage in companies.

Of the increases foreseen for April, gas will have the greatest impact. Unlike electric power, which was lagging behind in Buenos Aires and the suburbs, the adjustment will be throughout the country, although its application will be different depending on the distribution area, as per Clarin.

In the public hearings, the companies asked for a recomposition of tariffs from 33 percent to 58 percent. Enargas took those orders, but the percentage they would be willing to accept ranges from 30 percent to 40 percent, according to officials.

Although there will be another increase in October, the Government's initial estimate is that it would be lower than the one that will apply from April. In October 2017, the Executive Branch postponed the increase of that month for December. He did it to prevent that increase from becoming an electoral campaign tool. When it was completed, it was 45 percent.

According to Clarin, one of the ideas that had arrived in the hearings was a "flat rate", where customers pay the same for all two months. In this way, the "high" bills of the winter would be compensated with the bills with lower amounts of the summer. However, in Enargas they would have dismissed the idea because the Ombudsmen objected during the hearings.

During the past year, the Energy Ministry enabled customers to refinance their winter consumption during the summer. That possibility could happen again.

The reduction of economic subsidies to reach the fiscal deficit targets is a beam of the current economic policy. When it took over, more than 85 percent of gas rates were subsidized. In this way, the percentage of household spending for public services was completely out of phase with the rest of the world, as per Clarin.

After the successive increases, state gas subsidies lost weight. The Energy Ministry still subsidizes 30 percent of the cost of that service for the majority of clients. In the case of the social tariff, public spending for vulnerable households is higher, as per Clarin.

Between the December increase and the April increase, gas bills would go up almost 100 percent. A user of Metrogas R2-2 (low consumption) paid an average of USD 309 monthly in November. Since December, that bill reached USD 478. With an increase of 40 percent, the gas will go to that same consumer to USD 670 monthly. From end to end, it doubled.

The government's roadmap includes the complete elimination of subsidies for electricity and gas. That goal is agreed by the end of Mauricio Macri's term in December 2019. In that line, the next cut of subsidies will be in October. That will imply another rise in rates, although the percentage is likely to be lower than October 2017 or to be applied from next week.

According to Clarin, Patagonia and other cold areas of the country have a differentiated regime and will maintain the subsidies until 2023. The distributor Camuzzi, which is in charge of that region, would have found a system so that invoices are more even throughout the year, according to comments in the sector.

Before the official publication, a decree of the Executive Power is required in relation to agreements of Transportadora de Gas del Norte (TGN) and Transportadora de Gas del Sur (TGS) with MetroGas, the distributor of half of Buenos Aires.

COUNTRY : Argentina