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Argentina to propose 203% natural gas tariff hike

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Staff Writer | September 9, 2016
Argentina's government will propose increasing residential natural gas tariffs by 203% with twice yearly hikes of less than 10% at a September 16 public consultation.
Juan Jose Aranguren
LatAm   The 203% is less than the 400%
Energy Minister Juan Jose Aranguren said "The increase being proposed is an average of 203%," Aranguren told reporters, according to state newswire Telam, Platts reports.

Aranguren's office did not have further information on the plan when contacted Tuesday.

The 203% is less than the 400% that the government increased residential tariffs on April 1, a hike that was annulled last month by the Supreme Court after complaints by consumer rights groups.

The Supreme Court told the government to hold a public consultation before raising the tariffs, as required by law. The new hike is to take effect October 1, with biannual increases thereafter, Aranguren said.

This will help reduce state spending to subsidize the tariffs, which now covers 81% of the bill, while consumers pay the rest. With the increase, consumers will pay half of the bill and the rest will come from the state, Aranguren said.

With the gradual increases, the government wants to eliminate the subsidies by 2019 for most of the country.

It will take longer, however, in the colder southern region of Patagonia, where a slower increase in tariffs means the subsidies won't be eliminated until 2023, according to Aranguren.

In terms of wellhead prices, which account for about half of the gas bill, the 203% increase means that households will pay $3.42/MMBtu, up from $1.29/MMBtu currently. That is less than the $4.72/MMBtu it would have reached with the 400% increase.