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    Gas tariffs: what are the increases that the Government will present in a public hearing, in the midst of the sentence against CFK?

    December 5, 2022 - CE Noticias Financieras


      Some say that it was done on purpose so that very few would know about it. On the other hand, from the offices of the energy area led by Flavia Royón, a member of the Massista party from Salta, they assure that it was not something premeditated and that it was decided several days before the Justice set a date for the publication of this historic ruling.

      The truth is that this Tuesday, December 6, almost at the same time that the Federal Oral Court 2 will announce the sentence against Vice-President Cristina Kirchner in the Vialidad case, the Secretariat of Energy will be holding a new public hearing to explain the scope of the future adjustments in the gas bills that will be added to the increases that are currently being applied due to the tariff segmentation scheme and the removal of subsidies.

      The purpose of the public hearing -to be held virtually through the Webex platform- is to evaluate the update that will apply as from 2023 in the price of natural gas to meet residential and priority demand and the level of subsidy that will continue to be covered by the State for household users in the middle and low socioeconomic sectors.

      Although at the hearing Energy officials are preparing to present several scenarios of gas price increases and the different portions of the final value that could be assumed by the State, the technical report submitted by the Government suggests that the variant most likely to be approved for household consumption is the one containing a scale of increases ranging between 32% and 65%.

      Gas bill: how these increases will be added

      These increases -which will be applied to the value of the gas that makes up the variable charge of the bills- will be added to the current adjustments of up to 150% that are being received by the users of greater resources and the middle and low households that exceed the ceilings of subsidized monthly consumptions. These current increases -which correspond to the tariff segmentation and subsidy elimination scheme- were divided into three batches: the first one started in October and the last one will be implemented in January.

      With a view to tomorrow's hearing, the official report prepared by the Energy technicians provided a series of details and economic estimates on the main variables that will affect the gas business next year.

      The work begins by clarifying that "theprice of gas that is transferred to the tariff and billed to users derives directly from the proportion that the National State takes in charge of the price received by local gas producers, the price of gas imported from Bolivia and the price of imported and regasified LNG".

      As regards the big numbers of the sector, the report states that "the priority demand for natural gaswill reach 15,223 million cubic meters (MMm3) in 2023, distributed in 5,754 MMm3 between the months of January to April and October to December, and 9,469 MMm3 in the winter period from May to September".

      Supply and total cost of gas to meet demand

      As regards the gas supply to meet this demand, it should be noted that local producers will supply 13,488 MMm3 (88.6% of the total); 1,433 MMm3 (9.4%) will arrive from Bolivian fields and 301 MMm3 will be imported by methane tankers (2%).

      As for the total cost of the gas required to supply the priority demand, the report states that it will reach u$s 2,935 million, equivalent -according to official estimates- to some $653,498 million.

      Broken down by the origin of the fuel, the expected price for local gas is 3.90 dollars per million BTU (u$s/MMBTU); while for gas imported from Bolivia, the projected average value reaches 9.91 US$/MMBTU. In the case of LNG, the estimated average price for the period from May to September climbs to 42.07 u$s/MMBTU, to which must be added a fixed and variable regasification cost that ranges between 1 and 1.3 u$s/MMBTU.

      Taking into account these prices, the report states that local gas producers will invoice an annual total of u$s1,943 million and that transfers to Bolivia will imply an expense of u$s524.2 million. Meanwhile, for the LNG cargoes, what the state-owned Enarsa, in charge of imports, will have to disburse will reach US$ 468.1 million.

      How much will the Government cover in subsidies?

      After highlighting that "the weighted average price of gas in 2023 will be 5.22 u$s/MMBTU" (the updated value that households that lost subsidies will have to pay), the work of the Energy technicians gives almost as a fact that the final decision of the Government will be inclined to cover67, The remaining 32.7% (1.71 U$s/MMBTU) will be paid by users in the middle and low sectors who continue with their subsidized consumption.

      With this level of subsidies of 67.3%, the State would have to assume an expense of $ 439,921 million over the total cost of supplying the priority demand, estimated at $ 653,498 million per year.

      According to the example given in the Energy report, an R31 user -with an average consumption of 95 cubic meters per month- in the Northern area of Greater Buenos Aires should be prepared to face increases ranging from 32% to 65% in the price of gas as from 2023.

      If this user belongsto Level 1 (which groups those with higher purchasing power and who will not receive more subsidies) the current bill of $ 4,907 will increase to $ 7,288 per month.

      If you are a Level 2 user (made up of those who receive the benefit of the social tariff and have an income lower than the total basic basket of goods and services), the jump in the final bill will go from the current $2,621 to $3,084.

      And if you are among the Level 3 users (which mainly includes middle class households), the increase in the final bill will go from $3,718 to $5,312 per month.


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