Argentina to push ahead with gas price hike

Argentina is on track to begin raising residential natural gas tariffs from October 1 onwards in a three-year plan eliminate subsidies and reach market prices, Energy and Mining Minister Juan José Aranguren said late on Monday.

The minister’s statements came after a public consultation effort on the issue, which was one of the requirements set by the Supreme Court of Argentina last month when it ordered the government to suspend plans to remove subsidies on gas, upholding a lower court ruling on the country’s tariffs.

Over the next three years, subsidies on production and imports should be cut from 81% to zero, Aranguren said. On October 1, gas tariffs for households – which combined account for close to 25% of Argentina’s gas consumption – will increase by 203%, followed by biannual 10% increases through October 2019.

Companies and businesses, consuming around 65%, will face a six-fold increase in gas tariffs. According to Aranguren, the government is considering a special arrangement for small and medium-sized enterprises to cushion the impact of ramping up prices.

Mauricio Macri’s government hopes that by increasing gas tariffs it can both narrow Argentina’s budget deficit, as well as encourage investment in the country’s gas production.