The Government confirmed that before the end of the year the freezing of electricity and gas rates is finished

The Secretary of Energy, Darío Martínez, had already promised a update of gas rates by the end of the year. But today he went one step further and also confirmed that electricity rates will increase.

Government sources consulted by Buglethat, as of December, will advance on a “tariff transition scheme”. And as Martínez explained, the objective is “to ensure that those who have the ability to pay can pay the cost” and that for the rest of the cases a “much more focused subsidy program” will be used.

The government had already explored this idea in the summer, but then suspended all plans for the pandemic. The Minister of Economy, Martin Guzman, now commands energy policy.

Martínez, confirmed that the decree will not be extended again that froze the rates for electricity and gas, in a note with the newspaper “Black river”. Electricity and gas bills are frozen since April 2019.

The increases that the Government thinks are in “line with inflation”, that is to say around 30%. Metrogas, the country’s main gas distributor, says their costs went up 65%. The regulatory body Enargas stated that the rates have 85% delay.

With the regulatory frameworks totally breached, President Alberto Fernandez announced Thursday that “it is time to start tidying up.” His reference applied to rate updates.

Martínez confirmed that there will be an increase since december. Everything indicates that it will be towards the middle of that month. “What we cannot do is convert rates back to a problem for Argentines, “said the official, according to” Río Negro. “The increases” will not go directly to international values. “

This freeze started with the Solidarity Law, in December 2019. By June 20, it was extended for six more months.

In the Government they speak of an increase for the public that I can afford it, preserving the sectors “vulnerable”. It is believed that they could make an expansion of the “social rate”. However, there are middle sectors that the Executive wants not to increase, but has not yet found the equation to avoid it.

In the electricity sector, distributors owe more than $ 100 billion to Cammesa, due to tariff delays. As of August, energy subsidies already exceeded $ 250,000 million and that number is not final yet. It is, at least, 66% above the $ 150,000 million destined for that purpose until August 2019.

Cammesa raised $ 182 billion as of August. Although there is a four-month period left, it has already exceeded all spending in that category in 2019. In August of last year, it was at $ 87,000 million. In other words, it more than doubled in nominal terms.

With the Gas plan, the update in fuel prices, and the announcements of rate increases, decisions are beginning to be seen to correct all the delays in the energy sector.

The increases are tacitly in line with the claim of the International Monetary Fund, which this week sued the Argentine government a “credible” economic plan. Naturally, no plan is credible with frozen rates in a context of high inflation and high fiscal deficits.

Gas demand increased 0.6% in July, but it is 12% below that of the same month in 2019. If you take the last 12 months, the drop is 2.6%. “This indicates that the local supply reacts in equal magnitude to the decrease in the local demand”, observes the IAE Mosconi.

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