This Tuesday began the first of three public hearings to define rate increases and user segmentation. In this case, the official proposal for increases in the price of natural gas was presented, which will be transferred to users’ bills.
In the presentation, Maggie Videla Oporto, Undersecretary of Hydrocarbons, recalled that users of public gas distribution services with a social rate will not have increases as of June, while the rest of the users will have an average increase of 20 percent.
This calculation is based on the guideline of increases agreed with the International Monetary Fund, where the total increase in bills for users with a social rate must be equivalent to 40% of the salary variation coefficient (CVS) of 2021, which gives a percentage of 21.3%. As there were already increases in March that reached that percentage, they will not have any more increases in 2022.
“Gas and electricity rates must have corrections that must always be below the evolution of wages” (Videla Oporto)
For the rest of the users, without a social rate, the increase must be 80% of the salary variation of last year. That percentage is 42.7% for all of 2022. If the increases already applied in March are taken, the percentage increase from June will be between 18% and 20%, according to the different areas of the country.
The official detailed some examples of the application of the increases: in the case of users from the center of the country, the average bill will go from $2,008 to $2,378. For the downtown area, from $2,029 to $2,393. For the Northwest area, from $1,151 to $1,402; and for the South zone, from $2,112 to $2,651.
“This decision is based on the conviction of our National Government that gas and electricity rates must have corrections that must always be below the evolution of wages. Due to the need we have to improve purchasing power after the pandemic that we have gone through and at the same time that the bill has a less and less weight, “said Videla Oporto.
And he recalled that the 10% of users with the most purchasing power will stop receiving subsidies and, therefore, will have to face even higher increases. “The president clarified in his message that a process of allocating subsidies to users of public gas and electricity services will begin based on socioeconomic indices,” he added.
In the midst of internal hearings, unlike other hearings, this time the Secretary of Energy, Darío Martínez, did not participate, nor did the Enargas comptroller, Federico Bernal, who is in charge of the regulatory entity that must implement the new tariff schedules.
The gas service bill is made up of four variables: gas price, transportation cost, distribution cost, and taxes and fees. In the case of the price of gas, what is transferred to the rate and billed to users depends on the subsidies. That is, the percentage assumed by the State of the price paid to gas producing companies, the cost of gas imported from Bolivia and the cost of imported LNG.
According to the report presented at the hearing, today of the USD 5.76 per million BTU (the unit of measurement used by the sector) of the average price of gas, the State absorbs 75.6% (or USD 4.35) and the remaining 24.4% is what users pay (USD 1.41). In fiscal cost, the State would assume $275,079 million out of a total of $363,893 million (USD 3,064 million), according to data from the Ministry of Energy.
Criticism of increases and segmentation
During the hearing, the deputy from Mendoza Jimena Latorre, from the UCR, rejected the increases for being “inopportune” and criticized the lack of foresight and disorganization of the Government. “They have been illegitimately intervened with the regulatory entities for more than two years without any progress or result and they come to propose increases in a scenario of greater consumption, rise in international prices and lack of foreign currency,” she said in her participation.
“They say that they are not going to allow rates to grow above wages, but the problem is that wages are still far behind inflation. Behind the siren songs of frozen rates, the Government threw away the effort of the users during the recomposition of rates of the previous Government. The subsidies were estimated at USD 3,000 million and for this year they will be USD 15,000 ″, he concluded.
For their part, from the companies, represented by the Association of Gas Distributors (Adigas) they warned that the segmentation of rates will generate that, in practice, three additional rate charts are added to the schemes already in force, which could affect them economically or financially. .
From Adigas, they detailed that for each percentage point of increase in the price of gas in the PIST it is equivalent to $86 million of loss for the companies, since it impacts unrecognized costs in the pass thorugh. A 55% increase in price would equal an approximate loss of $4.73 billion. “The increases granted to distributors in their margin in 2021 and 2022 were well below inflation and salary variation,” said Daniel Martini, executive director of Adigas.
Amid the tension between Kirchnerism and Martín Guzmán, the hearings begin to define the gas and electricity ratesAlert in the red circle by the internal ones in the Government: they fear an impact on the activity and greater uncertainty about the economic courseThe increase in rates already applied in March had no effect on subsidies