The month of May brings with it a hard blow for natural gas consumers, with increases that defy any family budget. Residential users face increases that exceed 500%, while for businesses and industries, the figure rises to more than 1,000%. And this could get worse during the winter.
This spike in rates dates back to the first months of the president’s term. Javier Mileibringing rates to levels close to those of 2019, after the increases during the management of Mauricio Macri, especially for high-income households. However, For the middle and low income strata, a significant part of the cost still remains subsidized.
In an attempt to mitigate the impact on the middle class and stop the escalation of inflation, the Minister of Economy, Luis Caputoannounced the indefinite postponement of the increases planned for May, supported by the fiscal surplus achieved in the first quarter.
Meanwhile, the implementation of a new, more restrictive subsidy scheme, initially scheduled for April and successively postponed, still does not have a specific date. This delay reflects the complexity of the deficit generated by tariff expenditures in recent years.. A more gradual reduction than initially planned is now contemplated.
Gas bills consist of four components: generation cost, transportation, distribution and the corresponding taxes. The Government covers the difference between the production price and what users pay through subsidies.
The increases for residential users are significant: according to estimates by the consulting firm Economía y Energía, the increases for residential users Level 1 are around 343%, while those of Level 2 and 3 they reach 559% and 424%, respectively.
It is important to highlight that half of the country’s users benefit from discounts, especially those in areas considered “cold”as well as beneficiaries of social programs.
This increase in gas prices brings residential users to levels close to those of 2019, generating concern in the population.
Disproportionate impact on businesses and industries
Businesses and industries, classified as SGP 1, 2 and 3face a disproportionate increase in their rates due to the elimination of the subsidy on natural gas generation.
The users SGP 1mostly small businesses, will experience an increase of 1,140%, while SGP 2 and 3 will see increases of 799% and 318%, respectively, compared to May 2023.
It is crucial to highlight that there are disparities in the increases between the different distributors, which adds a layer of complexity to this already difficult situation for the commercial and industrial sector.
