Natural gas rates in Argentina skyrocket with increases of up to 1000%. Find out the impact on your pocket, how the tickets are made up and what measures you can take to save.
The next natural gas bills will bring with them sharp increases that exceed 500% for residential users and 1000% for businesses and industries, compared to what they paid last year.
Significant increase for high-income households
High-income households, included in Level 1 users, will experience an adjustment in their rates that will lead them to pay levels similar to those of 2019, during Mauricio Macri’s administration.
Low and middle income users still with subsidies
In contrast, low- and middle-income users (Tiers 2 and 3) keep a portion of the subsidized cost, meaning the increase will be smaller for them. However, even so, a significant impact on their ballots is expected.
Increase planned for May postponed
The Minister of Economy, Luis Caputo, announced the postponement of the increase planned for May with the aim of controlling inflation and avoiding a greater burden for the middle class. This decision is based on the fiscal surplus achieved during the first quarter.
New subsidy scheme under evaluation
The implementation of a new, more restrictive subsidy scheme, initially planned for April and then May, has been postponed again without a defined date. A more progressive reduction than originally planned is being evaluated, seeking to address the fiscal deficit generated by the tariffs.
Composition of gas bills
Gas bills are made up of four items: generation cost, transportation, distribution and taxes. The Government subsidizes the difference between the production price of gas and what users pay.
Residential user segmentation
Currently, there is a subsidy scheme that divides residential users into 3 segments:
- Level 1 (high income): They pay the full rate.
- Tier 2 (low income): They enjoy a social rate.
- Level 3 (middle income): They have a subsidized consumption limit.
Details of increases for residential users
The consulting firm Economía y Energía estimated the increases for Level 1 users:
- 343% increase: They go from paying $6,821 in May 2023 to $30,207 in April.
- 559% increase: For Level 2 users, the rate rises from $3,000 to $19,000 in April.
- 424% increase: Tier 3 customers experience an increase from $4,891 to $25,629 in their natural gas rates.
Cold Zone and benefits
It is important to highlight that half of the country’s users receive a 30% discount on their final rate for residing in the “Cold Zone”. This benefit can reach 50% for specific groups such as AUH, retirees, pensioners, social monotributists and electrodependents.
Increases in gas rates will have a significant impact on the economy of Argentine households, especially those with medium and low incomes. The postponement of the May increase and the evaluation of a new subsidy scheme seek to mitigate the impact, but considerable increases in ballots are still expected.
