Martín Guzmán said rates would not increase, but segmentation still remained and raised doubts

Economy Minister Martín Guzmán promised that the tariff increase announced for June would be “the latter part of the year.” And his statements deepened doubts about the implementation of “segmentation.”

This mechanism, which implies the removal of electricity and gas subsidies for the 10% of the population with the highest incomes, was originally planned in June. But the government did not come. It applied the increase in electricity and gas where it held a public hearing, but it did not move forward with that tool. And, after Guzmán’s phrase, about the “last rise of the year”, questions about whether it will be fulfilled deepened.

“The one in June is the last rate increase of the year,” Guzmán said in statements to AM750 and argued: “If there are doubts about the economic program, now there is nothing left. We have fulfilled all our deeds. promised: the issue of tariffs and most parities will be closed ”.

“At these rates, exactly what was announced in the economic program is produced, which is to have a scheme by which updates are segmented.” The Government divided the increases: 20% for lower income sectors (social rate) and 40% -42% for other clients. But the minister also stressed the need to remove subsidies to the higher income sector. That’s where most of the energy subsidies go. Guzmán described the scheme as “rich” and insisted that no developing country has had “3% to 4% energy subsidies” on previous occasions.

Clarion consult Economy if the segmentation still remains or has already been released for this year. “They are working on segmentation based on these rates without further increase this year,” they declared in that portfolio. “Sometime from June they could be in force,” they added. Thus, the minister’s declarations that there is no further increase refer to 90% of the population who will receive some form of subsidy. For those who pay the full rate, their tickets will register an additional increase.

In part, in the energy sector they believe that segmentation has been exceeded. Guzmán instructed the Economy to say “it is still standing” so as not to weaken politically. “The segmentation ends in an increase in rates. And the minister has just said that they will not go up any more,” understand public service entrepreneurs.

Guzmán’s words cause confusion. Segmentation is an “elimination of subsidies”, i.e., the State has decided to stop directing subsidies to certain sectors. If applied, Guzmán is -technically compliant with his statements, following technical arguments.

In return, the “removal of subsidies” would indicate increases in tickets. Subsidized sectors will lose state assistance and that represents an increase that could reach up to 200% in their fees. In that sense, Guzmán will break the promise and there will be increases. People will eventually pay more and the voice of the minister will be shattered.

“Once they apply subsidy segmentation to 10% of dwellings, fees will increase by approximately 200%. And, therefore, the increases will not end”, explains Alejandro Einstoss, specialist in energy matters, professor and consultant.

One possible interpretation is Guzmán’s reference to what happens to 90% of users – who have already had these two increases (March and June) – and “forget” the 10% with the highest revenue? In that sector, if segmentation is applied, there will continue to be increases.

In vigorous Kirchnerism, in which they reject segmentation, they understand that Guzmán’s words seal the fate of segmentation. “He realizes that it’s useless, that it’s inappropriate and causes more problems”, they excuse themselves.

The battle for segmentation and energy subsidies dominates the Frente de Todos scene (see page). Kirchnerism, after Guzmán’s declarations, felt victorious. In the field of Guzmán they sent word that “segmentation” was maintained, but they were brief on details on the matter.

Argentina has allocated US $ 11,000 million in energy subsidies in 2021. In his understanding of the IMF, the minister said he plans to reduce these expenditures by 0.6% of GDP (approximately US $ 3,000 million).

Due to rising international prices, the forecast is that subsidies will continue to increase and could be close to US $ 20,000 million. From the two increases (with a total of 40% for most clients), there may be some tax savings, but until now the Economy has not specified how much it will be.