. The Ministry of Energy of the Nation established new gas prices at the Point of Entry to the Transportation System (PIST) that will be transferred to end users in invoices based on a three-stage temporary scheme for consumption: (i ) between April 1 and 30, 2024; (ii) from May 1 to September 30, and (iii) from October 1 to December 31, 2024.
The new gas prices in the PIST were established by the portfolio headed by Eduardo Rodriguez Chirillo through resolution 41/2024 published in the Official Gazette. They imply increases in this tariff component of up to 300 percent compared to previous values.
Its application is detailed in three annexes according to the categories of Residential users (N1, N2 and N3), General Service P (non-domestic use), the geographic tariff subzones, and the companies providing the distribution service.
Resolution 41 establishes that ENARSA, the producing companies and the distributors and/or subdistributors of natural gas through networks that have entered into contracts or supply agreements within the framework of the Gas.Ar Plan. (Decree 892/20), they must – within a period of five calendar days – adapt the tariff tables and present them to the Secretariat and the Regulatory Entity ENARGAS, for approval and implementation.
Likewise, Energy instructed ENARGAS to “provide the necessary measures so that the invoices issued by the public gas distribution and subdistribution service providers through networks throughout the country reflect the gas prices at the Point of Entry to the System.” of Transport (PIST) established in this resolution”.
The Secretariat, which acts under the Ministry of Economy, also determined in R-41 that “for the purposes of transferring gas prices (PIST) to the tariff tables of the distribution service, ENARGAS must carry out the conversion to dollar per million BTU using a factor of 27.10473”.
And he adds that “the exchange rate to be used to transfer gas prices to rates will be the average value of the selling exchange rate of the Banco de la Nación Argentina (Currency) observed between the 1st and 15th of the immediately preceding month. to the transfer of prices”.
Energy instructed ENARGAS “to issue tariff tables that reflect on a monthly basis the variation in the exchange rate of the prices to be transferred to the tariff.”
R-41 comes to correct a pricing policy for gas in the PIST, which has been subsidized during the previous government.
In the recitals of the norm it was recalled that Decree 892/20 provided that “the National State may be responsible for the monthly payment of a portion of the price of natural gas in the PIST, in order to manage the impact of the cost of gas natural to be transferred to users”.
And it is noted that “based on said regulatory forecast, the State set a price for natural gas in the PIST, which when transferred to the end user does not reflect the real costs of supplying natural gas to the distribution companies.”
Energy pointed out in R-41 that according to a Technical Report from the Ministry of Economy, the so-called “administration of the impact of the cost of natural gas to be transferred to end users” meant that the National State has contributed (not including ENARSA) , an amount of two hundred and twelve billion pesos ($212,202,000,000).
Resolution 41 also refers to the fact that now “through Decree 55/2023 (December) the emergency of the National Energy Sector was declared with respect to the generation, transportation and distribution segments of electrical energy under federal jurisdiction, and transportation and distribution of natural gas”, and that the actions derived from it will be valid until December 31, 2024.
In this framework, the SE was instructed “to develop and implement actions to sanction prices under conditions of competition and free access, maintain in real terms the income levels (of companies in the sector) and cover the needs of investment, to guarantee the continuous provision of public services for the transportation and distribution of electricity and natural gas under adequate technical and economic conditions for providers and users.”
Then, it was pointed out that “through Decree (DNU) 70/2023, a series of measures were adopted as a result of the unprecedentedly serious situation that the country is going through, generating deep imbalances that negatively impact the entire population, especially socially and economically, mainly affecting the most vulnerable sectors.
It also refers that in DNU 70/2023 (which was rejected in the Senate but not yet discussed in Deputies) the government “accounted for the existing situation in which the twin deficits (fiscal and external) were equivalent to 17 points of the Gross Domestic Product (GDP).”
And in this regard, R-41 highlights that “the need to adopt urgent measures to put an end to the fiscal deficit was also pointed out – for the purposes of organizing public accounts – and since the energy sector is central to the reversal of the crisis situation that crosses the country”. “Therefore, mechanisms must be implemented to reduce the contributions that the National Treasury makes within the framework of Decree 892/20 mentioned above.”
To this end, Energy designed the application of the price for gas in the PIST taking into account the subsidy segmentation regime established in Decree 332/22, according to which the residential user sector is made up of THREE (3) levels of subsidies: Level 1 – Higher Income, Level 2 – Lower Income and Level 3 – Average Income.
In this regard, he noted that said regime “established limits on subsidy reductions for Level 2 (N2) and Level 3 (N3) residential users based on a total annual percentage increase in the Salary Variation Coefficient (CVS), whose effective implementation “aggravates the level of contributions to be made by the National Treasury.”
The full subsidy reduction for Level 1 (N1) users was reached in the May-July 2023 quarter, for N2 users there was no reduction, and for N3 users there was only a minor reduction in February 2023. N1 users They pay the full cost of the public natural gas service per network contained in the invoice.
In the same order, R-41 recalls that “through Resolution 686/2022 of the SE it was established that, for the consumption of natural gas users through the network identified as Level 3 – average income – that exceeds the amount of subsidized cubic meters corresponding to the period being billed, rates that reflect the full cost of supply will be applied.
Energy also emphasized that through Decree (DNU) 70/23 it was empowered to “redetermine the structure of current subsidies in order to ensure end users access to basic and essential consumption of electrical energy and natural gas.”
This led her to draw up a Basic Energy Basket (CBE) whose application is imminent to determine new reductions in state subsidies for this item.
The SE maintains in R-41 that “under criteria of prudence and rigor in determining the effects on the end user, in this instance the conditions and limits established in Decree 332/22 have been observed, without prejudice to the fact that the The Secretariat may redetermine the structure of current subsidies in order to ensure end users access to basic and essential consumption of natural gas, in accordance with the provisions of DNU 70/2023.
And he pointed out that “in line with the readjustment of the subsidy structure and its targeting, the continuity of the bonuses on the price of natural gas provided for in Resolution 6/2023 of the SE for users of the General Service P is not contemplated. “(Bonus for users of this Service who are registered or register in the Registry of SME Companies).
In its Energy Resolution it dismissed the questions to the validity of the Public Hearing held last February “with the purpose of evaluating and treating, among other points, the price of gas in the PIST and the price of propane gas indiluted by networks…”
An issue (re)raised by objectors at said Hearing refers to the fact that there was no information on the cost of natural gas at the wellhead.
In the recitals of R-41 Energy, it maintains that “since gas is a commodity, in many cases its price is not set only by the suppliers of the product (in this case the Gas Producers) but its amount arises from the interaction of supply and demand, sometimes even of an international nature”.
“The natural gas production segment is deregulated, unlike what happens with the transportation and distribution segments, which were declared a public service by Law 24,076, and whose Enforcement Authority (ENARGAS) is the one that sets the rate to the providers of said services,” recalled the Resolution.
Likewise, it was described that “within the framework of the Gas.Ar Plan, public auctions and contests are carried out in the Electronic Market (MEGSA), in which gas producers and distributors participate, from which purchase and sale prices result that are then published in the Official Gazette”.
“Consequently, it is appropriate to consider the price of natural gas that arises from the rounds of the Gas.Ar Plan approved and regulated by Decree 892/20 and its complementary resolutions.”
And it is also added that “since local production is insufficient to supply current demand, the value at which the gas necessary to satisfy the demand not covered by the available supply must be taken into account.”
Energy estimated that for this year the priority demand for natural gas will reach 14,151,000,000 m3, distributed in 5,096,000,000 m3 between the months of January to April and October to December, and 9,055,000,000 m3 for the winter period of May. To september.
