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  HOME | Argentina

Argentina Proposes 203% Hike in Natural Gas Prices at Public Hearing

BUENOS AIRES – Argentina’s government said in a public hearing Friday that it planned to raise natural gas prices by 203 percent and slash energy subsidies that have contributed to a large budget deficit.

“On average, residential consumers will pay 203 percent more than what they were paying on March 31 of this year,” Energy Minister Juan Jose Aranguren said at the start of the session in Buenos Aires.

The government announced earlier this year that long-frozen residential gas prices would climb by up to 800 percent starting April 1, although after a public backlash it said the hike would not exceed 400 percent.

The public hearing was held after Argentina’s Supreme Court temporarily blocked the price increases, ruling last month that the government must first consult the public in a non-binding hearing first.

A total of 330 people, including government, business and consumer protection representatives, registered to speak at the hearing that is expected to conclude on Sunday.

Aranguren said Argentina’s natural gas supply system was “distorted, unequal, unfair and archaic.”

He pointed out that 60 percent of Argentine households have access to the natural gas grid, while the rest of the population depends on substitute fuels such as liquefied petroleum gas that they pay up to four times more to consume.

In the winter months Argentina is forced to import nearly one-third of its natural gas consumption, the minister said, adding that the lack of transport capacity sometimes makes it difficult to meet all the demand and forces cutbacks to Argentine industries.

The government currently subsidizes 80 percent of residential gas consumption, and “what’s worse is that it also subsidizes 40 percent of Argentines who don’t have access to the natural gas grid.”

“We want to move toward a system in which supplies are sustainable over time. We want to promote local production, try to reduce imports to a minimum, subsidize only those who need it and use natural gas responsibly,” Aranguren said.

That can be achieved by promoting gradual and predictable price increases and subsidy reductions that narrow the gap between the cost of natural gas production and the price paid by consumers, he added.

Average natural gas consumption in Argentina totaled 128 million cubic meters (4.5 billion cubic feet) per day in 2015.

End consumers paid $2.50 per million BTUs (British thermal units) of natural gas last year, although local producers and foreign suppliers charged an average of $5.83 per million BTUs for that fuel.

He said the difference was the roughly $5.7 billion in subsidies for natural gas consumption the government was forced to pay last year, an amount that conservative President Mauricio Macri’s administration, which took office in December 2015, aims to lower to nearly zero.


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