Argentina's biggest natural gas transporter, Transportadora de Gas del Sur (TGS), said Monday it may not be able to sustain adequate operations and investment plans this year, given that a court-ordered freeze in gas pricing hikes has cut payments from distributors.
TGS said four distributors, including Metrogas, the country's biggest, owe it Pesos 205 million ($13.8 million).
The distributors have not paid TGS because a federal court has ordered them to stop collecting bills with hikes of 400% to 500% from consumers, and decrease pricing to April 30 levels.
The government of President Mauricio Macri, who took office in December, implemented the hikes May 1. The decision is designed to finance a doubling of wellhead prices to $5.20/MMBtu, helping to spur investment in increasing production and reeling in record-level imports.
The court, however, blocked the hikes in July, and last week sent the government's appeal to the Supreme Court, which is expected to make a ruling this month.
TGS, which transports about half of the nation's gas demand, said higher pricing is needed "to recover the sustainability" of the business after 15 years of frozen tariffs. The previous administrations kept a tight lid on public utility pricing to fuel consumer spending as a driver for economic growth.
If the pricing suspension drags on, TGS warned that it may not be able to continue with plans to invest Pesos 790 million this year, or it would have to ask for "economic assistance" from the government.
Otherwise, "the company's economic and financial situation and its investment plan would be seriously affected," TGS said.
Macri's conservative government is trying to rebuild gas production from a 10-year low of 113.7 million cu m/d in 2014, helping to halt imports of costlier LNG by 2021-22. With higher wellhead prices, Macri wants to encourage development of the country's huge shale and tight resources, which led an increase in production to an average of 121.4 million cu m/d in the first five months of 2016, according to Energy Ministry data.
Despite the rise in production, consumption has been increasing faster, forcing the country to ramp up imports to a record 49.8 million cu m/d of gas in June, or about a third of the 130-180 million cu m/d of demand, according to the energy ministry.
TGS is indirectly controlled by the local groups Pampa Energia and a consortium of the Sielecki and Werthein families.
