Gas: the tariff increase is on average 350%, but for some users it exceeds 600%.

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On Wednesday the government made it official increase in gas tariffs natural gas network to homes, businesses, industries and other non-domestic users. So, he took another step forward removal of subsidieswhich forms a central part of the fiscal adjustment carried out by Javier Milei and requested by the International Monetary Fund (IMF).

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The increase, according to private sector sources, is 350% on average for residential AND exceeds 600% for the rest of the users. From May there will be further adjustments for high-income families and other non-residential users, as well as a monthly indexing of a part of the tariffs, so every month there will be increases for all types of customers connected to the network.

When it comes to averages, the data hides much higher impacts on the final bill of some categories of users. Consulting the sources of the distributors, no one dared to provide precise figures, while the Government did not respond to the numerous questions posed by this newspaper over the weekend.

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During the day the consultants will carry out calculations to specify the increases for each type of customer. In Peronism they warned before even seeing the final impact, only when they observed the increase in the price of gas, that “the adjustment is criminal; next to this, Mauricio Macri is the king of social justice”.

It is worth mentioning that since April 2019, energy rates have remained systematically below the evolution of accumulated inflation.

Why the increase in gas and the removal of subsidies

As anticipated Clarion last week, the gas increase consists of two sets of adjustments: the price of gas at the point of entry into the transportation system (PIST, “wellhead” or wholesale), through which the subsidies are paid by the national State, and updates to the tariffs applied by gas transport and distribution companies. All this, together with taxes, constitutes the final ballot.

Resolutions 112 to 123 of the National Gas Regulatory Body (Enargas) are added today to Resolution 41/2024 of the Ministry of Energy, published last week. These regulations establish a new price for gas that is reflected in the rates and remuneration that regulated companies will charge.

The government’s decision was increase fixed tariffs very sharply and reformulate the tariff system. The companies justify that their main costs (salaries, maintenance and taxes) remain stable throughout the year and do not vary based on the consumption of their users.

This way there will be a flat rate throughout the year, without major variations between winter and summer. In the coldest months of the year, families consume 5 times more than in the hot ones. By paying similar tariffs throughout the year, some experts criticize – and this is why it was not applied during the government of Mauricio Macri – there is no price signal that reflects the relative scarcity of the good (gas) that encourages a efficient use of energy resources.

Another salient novelty is that, as for other public services such as electricity, companies (Gas Transporter del Norte -TGN-, Gas Transporter del Sur -TGS-, Metrogas, Naturgy, Camuzzi, Ecogas, Gasnor, Gas NEA, Litoral Gas and the sub-distributor Ransoms) will have rates indexed to wage trends, wholesale inflation and construction costs starting in May.

In exchange, these companies will be obliged to allocate investments of at least 121,210 million dollars (at constant prices this month) for the rest of the year, a figure close to $120 million to improve the quality of service and maintain the security and reliability of supply.

For a good extension of the country, the benefit of “cold zone” discounts of between 30% and 50% on the price of gas is maintained, something that the Government wanted to eliminate in the “omnibus law” of January and which has so far been left intact in the new version of the “Bases law” project.

On the fiscal front, the Government aims to reduce energy subsidies by 0.5 percentage points, from 1.6% of Gross Domestic Product (GDP) to 1.1%. This is why it also implemented large increases in electricity and completely eliminated state aid to high-income families, small businesses, industries, buildings, hospitals, clubs, schools and other non-domestic users.

The Basic Energy Basket (CBE), which will redesign the subsidy system, is still under study, and some sources indicate that its implementation could take two months longer than expected: from May it would last until July.


Source: Clarin

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