Through the increase in tariffs and the potential decrease in gas imports, the government plans to reduce energy subsidies in 2023. In the budget bill for 2023, Economy estimated the subsidies in the electricity and gas bills it will represent 1.6% of GDP. Although the government has not given the numbers, the articles would have dropped from more than $ 13.5 billion, projected for this year, to a range of between $ 11 billion and $ 13 billion in 2023.
camesaelectrical installation wholesale company, will be the company with further decrease in state money. It will rise from $ 9,000 million this year to $ 6,500 million in 2023, according to the consulting firm Economy and Energy, led by Nicolás Arceo.
The drop in spending would be due to less subsidies on the electricity bill. The implementation of the subsidy register means that between October 2022 and February 2023 between October 2022 and February 2023 between 5 and 6 million households will stop benefiting from discounts on gas and electricity bills.
The amounts customers pay for tickets sufficient to cover at least 50% of the costs. Which marks a change from what is happening for most of 2022. The revenue from the bills managed to cover a third of the costs of the electrical system.
In Buenos Aires the deficit is greater because the tariff delay is more pronounced than inside.
“In nominal terms, energy subsidies will be close to $ 2.2 trillion this year and about $ 2.3 trillion in 2023,” said Alejandro Einstoss, economist and consultant with Energy and Public Services.
The decline depends on the pipeline
The government has allocated 12 billion dollars in energy subsidies in 2021that it represented about 2.5% of GDP. This year, rising international energy prices forced Argentina to pay more for the gas it imports during the winter. In addition, record imports of fuel oil and diesel fuel had to be made. The country is on track to consume $ 13,500 to subsidize tariffsaccording to Economy and Energy.
That number would fall in 2023as is clear from the interpretation of the financial statements. The subsidies would range from $ 11,000 million to $ 13,000 million. If the pipeline connecting Vaca Muerta to Buenos Aires is operational by June 20 – as promised by the government -, the state-owned Enarsa would be able to buy less imported gas and consume more domestic production, which is cheaper. .
The domestic gas is paid for close to US $ 4 per million BTUs (the unit of measurement of the sector), while in imports it reaches up to US $ 30 per million BTUs.
“Given the importance of transfers to the electricity sector, the volume of subsidies in 2023 will mainly depend on two factors: the monomic generation price, as it includes part of the subsidies for local production and for the import of natural gas; and the increase in the seasonal price paid by end users “, according to Arceo, consultant who dealt with the finances of YPF from nationalization until the end of 2015.
The government said gas bills will rise by 100% due to the removal of subsidies. But he is more reticent in relation to the light gains. So far, it has removed 20% of the subsidies. As a result, the increases were between 40% (for those who keep the benefits) and 50% (for those who lose them).
But the removal of subsidies in this two-month period is the last of all. In the bimonthly November-December and January-February 2023, the State aid deduction will be higher. Experts estimate that the increase in electricity could reach 170% for users left without subsidies. In the case of businesses, it is estimated at 140%.
“Considering the current credit to date, the total amount of subsidies in the current year would represent 1.9% of GDP. However, taking into account the delays in the maturation of items destined for the energy sector, as well as the resources needed to address transfers in the last quarter of the year, it is estimated that they can reach 2.5% of GDP“, detail in Economy and Energy,
“Current transfers destined for the energy sector in the next year (subsidies) would reach 10,896 million US dollars, or 1.6% of GDP. It should be noted that the reduction in subsidies in relation to GDP compared to what occurred in 2021 it is due to the growth of GDP in dollars considered in the 2023 Budget Law “, underlines Arceo.
Former economy minister, Martín Guzmán, waged battles with Kirchnerism over the need to lower subsidies, which he considered to have a “pro-rich” bias. Sergio Massa has been the holder of the portfolio for two months, and has advanced in cutting these rumors more than his predecessor.
Source: Clarin
