Due to the government’s proposed steep subsidy reduction and hikes demanded by energy companies, middle-class families may be in for a surprise when gas bills start arriving in April possible increases of up to 666% and payments go from $3,100 to almost $24,000.
This is the impact that the Economía y Energía consultancy firm, directed by Nicolás Arceo, has estimated starting from the new transitional regime presented on Monday by the Minister of Energy, Eduardo Chirillo, and starting from the assumption that the Government validates the increases in between 400 and 600% ordered by distributors and transporters.
In the first public hearing, Chirillo proposed yesterday to transfer the cost of gas to the final tariff through a reduction of subsidies in sections of 33% in February, March and April until their elimination and the reorientation of aid to “vulnerable” sectors through a energy basket based on household income and surface area.
Today, the housess pay $0.7 per million BTU and the idea is that they will pay $4.8 on average in 2024, that is, five times more than now. This is what Energía estimates will be the supply cost that will arise from the combination of the price of local gas, imports from Bolivia and the purchase of LNG vessels.
Yesterday’s hearing was supposed to define transportation and distribution costs, one of the four components of the ballot with a weight of 11 and 24% respectively. Taxes account for another 24% and the wholesale or producer price (PIST) is 40%. As regards this last value, the subsidies will be eliminated, for which another hearing will be called.
In this framework, the greatest impact will fall on the middle class, one of the three levels of subsidies defined by the previous government. According to Economy and Energy, for an average monthly consumption in CABA with taxes, the Metrogas ticket It will go from $3,100 in January to $8,600 in February, $14,300 in March and $23,700 in April.
This is because, on the one hand, the middle-income sector (tier 2) and the high-income sector (tier 3) will pay the full cost of supply in April, i.e. the wholesale price. And, on the other hand, an increase of up to 500% in transport and up to 600% in distribution was considered, in line with what was requested by companies.
High-income households in CABA, meanwhile, will go from paying bills of $4,500 in January to $9,800 in February, $13,500 in March and $23,700 in April, representing a 422% increase in three months for the sector . It represents 40% of the user universe.
Finally, low-income users (tier 2) will go from paying $2,100 in January to $5,100 in February, $9,400 in March and $17,300 in March, a 697% jump in three months. For this reason, it was considered that families will pay only 50% of the cost of supply (PIST) and the entire cost of distribution and transport.
Javier Milei’s government is looking for him accelerate the reduction of energy subsidies, an item that represented half of the primary deficit equal to 3% of GDP in 2023. Furthermore, it is a key chapter of the adjustment being negotiated with the IMF. The Minister of Economy, Luis Caputo, announced that he will gradually reduce them over three years (0.7% per year).
The last comprehensive tariff review took place in April 2017. Then, in April 2019, Mauricio Macri froze the planned increases. During his administration, Alberto Fernández suspended the review, authorized temporary increases (2021 and 2022) and last year there were increases due to the suppression of subsidies, then suspended after PASO.
Regarding electricity, the Government yesterday allowed registration at the public hearing called for next January 26th and listen to the proposals of Edenor and Edesur, while on January 29th it will be the turn of the transporters. Companies have already begun to send their requests for “tariff restructuring” and income.
Source: Clarin
