It’s official: the Government has launched a 20% increase for gas, which will be applied from June

The Government has ordered Enargas, the gas regulator, to apply an increase to the rate schedule from June 1. The increase will be 20% for customers and does not provide for a “segmentation”, as expected Clarion a week ago.

The increase will be 41.7% for the cost of the gas itself. The technical name is the “system entry price” (PIST). Distributors will charge that increase to their customers. Since the cost of gas represents between 45% and 50% of what is paid on the bill, the increase for customers is somewhat higher than 20%.

The Secretary of Energy held two public hearings. Initially -in March- it applied a 20% increase, to improve the margins of gas distributors and carriers. At the second hearing (in May), he sought to lower the amount of subsidies paid by the State for the amount of gas in bills.

The state subsidized 75% of the cost of gas in bills. Starting in June, that subsidy will go down.

This is because the Ministry of Economy has decided that gas shares will pay 40% more for that input than they have until now. The increase represents a 20% increase in households, but the increase may be higher in industrial customers and lower in the case of customers with a social rate.

“When treatment is given to the various presentations made within the framework of the public hearing, it coincides with this opportunity (Ministry of Energy) to determine the new Prices at the Point of Entry to the Transportation System (PIST) for natural gas, effective as of June 1, 2022 ”, said a resolution of the Secretary of Energy.

Now, Energy is expected to instruct Enre to make an increase in light tickets. That provision will come out on Monday, to apply from June 1.

There is a difference between gas regulation and light regulation. All gas concessions are under the jurisdiction of the national Executive Branch. While the electricity is in the hands of the provinces, except Edenor and Edesur, which report to the national State.

Gas distributors buy this liquid from producers. They agreed on a price. One part is covered by the rate charged to clients, and the other is paid by the State. Regarding gas imports, they were conducted by the state-owned IEASA and then they tried to transfer them to gas distributors. Because they are generally unable to afford them, IEASA accepts grants.

“It is worth highlighting the significant and widespread increase in international prices of energy commodities, generated by rising international demand (…) Moreover, the conflict unleashed between Russia and Ukraine, has determined a new and significant increase in the international prices of the aforementioned products, especially Liquefied Natural Gas (LNG) and Gas Oil, “commodities” that our country must access annually in the winter ” , Energy says to justify that it will continue to subsidize the largest share of the cost of gas.

This year, 14,420 million cubic meters of gas will be consumed, with more than 9,000 million between May and September. Like Argentina, the gas it has is not enoughbringing from Bolivia and import by ships.

When you buy from local producers, you pay between US $ 4 and US $ 5 for gas, while when you import from Bolivia you pay US $ 11 per million BTU -unit of sector measurement- and spending of US $ 39 in LNG imports that were then revived.

“The total gas needed to supply the estimated priority demand for the year 2022 is US $ 3,063.6 million, equivalent to MM $ 363,893, resulting in a value of US $ 5.76 per million BTU,” Energy said. At the hearing it was said that the State pays for 75% of this cost.

The increase in PIST (the price of gas itself), which is 41.7%, will allow some reduction in subsidies. Beneficiaries of the social rate have a 100% subsidy on the consumption of certain quantities, and discounts on surpluses.

“It is up to Enargas, within the framework of its powers, to dictate the necessary instrumental and enforcement actions due to the increase established by this measure for the adequacy of natural gas prices at the Point of Entry to the Transportation System (PIST) and prepare and immediately implement the new rate charts derived therefrom, applicable to gas consumption occurring on June 1, 2022, in accordance with current regulations ”