Argentina will save 1,410 million dollars due to the reduction of electricity subsidies

One week before the public hearing in which the increase in electricity rates will be debated as of June, the Secretary of Energy in Argentina published a series of internal documents that whiten, once again, the internal in the Government, personified in the figures of the Minister of Economy, Martín Guzmán, and the Undersecretary of Electric Power, Federico Basualdo.

The latter, in a report requested by Secretary Darío Martínez, calculated that the savings in subsidies this year will be about $163,453 million (1,410 million dollars), equivalent to 0.23% of the Gross Domestic Product (GDP). The undersecretary warned that the increases in rates for households that will be completely removed from subsidies (10% of the total) “do not contemplate the principle of gradualness” defined by the Supreme Court in the 2016 Cepis ruling.

The savings of $163,000 million is not enough to meet the 0.6% reduction -about US3,000 million- required by the Fund, but it is used to pay four bonuses to retirees, five months of the Work Promotion plan or six months of Universal Child Allowance ( AUH), according to Rigo.

The study prepared by the Undersecretary of Electric Power reveals the costs of the Argentine Interconnection System (SADI), which this year will grow by 38% to 13,642 million dollars (between fuels and remuneration to generators) or about US100 per megawatt-hour .

He also anticipates that it will be difficult for the middle class to pay their bills, while the increases for industry and commerce “attack the process of economic growth and would be one more channel for accelerating inflation, due to the variation in their costs.” Basualdo’s document, which is part of the file from the public hearing on Wednesday, May 11, states that “the proposed adjustment mechanism is contradictory with the objectives of economic growth set forth in the agreement (with the International Monetary Fund, IMF) and will put considerable pressure on the rest of the prices in the economy.

Wholesale energy prices rise

The Government increased by 79% the prices of wholesale electricity for companies in industry and commerce categorized as Large Users of the Distributor (GUDI), which will see a 60% jump in their bills starting this month.

The measure is contemplated in the agreement with the International Monetary Fund (IMF). The spirit is to “equalize” all the big companies and leave them without subsidies, as happens in other categories such as “GUMA” and “GUME”.

According to the Undersecretary of Electric Energy, the recent increase in February translated into fiscal savings of $14,000 million. The various official sources did not respond to the reduction in subsidies due to this new measure.

Some of the firms that will have an increase -as happened in February and August 2021 and in February of this year- are Carrefour (supermarkets), Trenes Argentinos, Ferrovías (trains), AySA (water), Fate (tires) , Philips (electronics), Cablevisión, Telefónica (telecommunications), Roemmers (laboratories), the Sheraton hotel chain and Aerolineas Argentinas, among others.

Leave a Comment