In the last few hours, the National government of Javier Milei decided to again stop the increases in rates of light and gas scheduled for July. In this case, the increase was intended to improve the margins of companies that provide regulated public services for the transportation and distribution of electricity and natural gas, and would have had an impact on the bills of households, businesses and industries of around 2% or 3%.
On the other hand, in a desperate attempt by National government to control the inflation next month, the Minister of Economy, Luis Caputodefined that it will apply a tax increase to the fuels which is equivalent to a 1% impact on gasoline and diesel, which will be effective starting Monday, July 1.
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Both measures seek to consolidate a process of lowering the inflationwhich would have been interrupted in June after five months, precisely due to the tariff adjustments applied by the National government whose main objective was to reduce public spending on different subsidies.
On the side of the light and the gasthe companies affected by the measure are Transener, Transba, Transpa, Edenor, Edesur, Southern Gas Transporter (TGS), Northern Gas Carrier (TGN), Metrogas, Naturgy, Camuzzi, Ecogas, among other. “We are going to have to violently reduce our investment plan,” anticipated the executive of one of the aforementioned firms.
It is worth remembering that, between February and April, National government had signed agreements with the companies to withdraw judicial and administrative claims in exchange for increasing rates and maintaining a monthly indexation formula based on the past evolution of the inflationwages and the cost of construction.
Meanwhile, for June Caputo had ordered the Secretary of Energy, Eduardo Rodríguez Chirillocancel that mechanism and start from July with a formula that incorporates the inflation projected future to update company income.
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However, the first time that this formula had to be applied, which according to the agreements corresponded to the month of May, the National government He postponed it until June. Now, the action of the administration of Freedom Advances will be the same: regulate the increases so that the final number of the inflation.
However, by the end of next month, electric companies will have a delay in their rates of close to 50%, equal to the inflation accumulated since February, while for distributors of gas The delay will be 25%. With this forgone income, part of the investment plan could be delayed.
For example, the promise of National government for the private sector is that before the end of the year it will convene the Five-Year Tariff Reviewwhich will define a five-year investment plan in exchange for guarantees and certainty regarding rates. This year’s arrears will be compensated in the future with higher increases that users will pay for 60 months.
On the other hand, the fuels Yes, they will have an increase next week, which will incorporate the monthly devaluation of the peso against the dollar and the tax increase, so the naphtha will go up to at least $930 or $935 per liter in the Autonomous City of Buenos Aires. The cost varies depending on the location and province.
The remaining update of taxes to the fuels exceeds $100 per liter of naphtha and the $80 in the gasoiland will be applied throughout the second semester, starting in August, possibly in installments.
With these taxes, the Government of Javier Milei seeks to recover tax collection for a total of 0.5% on the Gross domestic product (GDP) throughout the year, or the equivalent of 3 billion dollars, 10% of the fiscal adjustment proposed by the administration of Freedom Advances upon assuming.
