The Government launched a “transition period” for the removal of subsidies –

The Government launched a “transition period” for the removal of subsidies –
The Government launched a “transition period” for the removal of subsidies –

This Tuesday, the Government launched the “transition period” towards a new energy tariff scheme that seeks to replace generalized subsidies with targeted subsidies. The objective is to pass on the real costs of energy to consumers through a gradual reduction of subsidies on electricity and gas bills.

Through Decree 465/2024, published in the Official Gazette, it is established that it is appropriate to begin this transition towards a more specific subsidy model. This new scheme is designed to promote the economic and financial self-sufficiency of the energy sector, encourage oil and gas exports, and create an environment that favors private investment in infrastructure through the free interaction between supply and demand.

The transition will last six months, from June 1 to November 30, 2024, with the possibility of a single extension. During this period, it is intended to implement the Basic Energy Basket (CBE) and restructure energy subsidies.

  • Until the new regime is fully implemented, the Ministry of Energy will have the power to make necessary adjustments to the segmentation system previously established by Decree No. 332/22. Among the measures that the Secretariat may take include:
  • Establish limits on subsidized consumption volumes for all residential categories and segments, both for electricity and gas.
  • Apply discounts on the Energy component to users classified in Levels 2 and 3 of the Registry of Access to Energy Subsidies (RASE).
  • Charge at wholesale prices for consumption that exceeds the maximum subsidized volumes, with possible gradual bonuses for Level 2 users.
  • Periodically review the volumes of maximum subsidized consumption and the applicable discounts, thus encouraging efficient consumption.
  • Modify the classification and segmentation of residential users in the RASE, considering income indicators and enabling a unified category for those who need assistance to access energy.
  • Calibrate the variables necessary to implement the targeted CBE subsidies, conducting tests and evaluations during the Transition Period.
  • Invite users to update their data in the RASE and cross-reference information with other databases to keep the beneficiary registry updated and minimize errors.
  • Determine mechanisms to compensate distribution companies for lower income resulting from bonuses applied during the transition.

With these measures, the Government aims to ensure an orderly and fair transition towards a more efficient and sustainable energy subsidy scheme, while ensuring that the most vulnerable users continue to receive the support necessary to access energy.

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