The Argentine government will push ahead with plans to increase residential natural gas tariffs in October, taking into account the concerns expressed by 420 contributors during a public consultation, Energy Minister Juan Jose Aranguren said.
"We are going to mull everything that we heard," Aranguren said in a televised press conference late Sunday after the three-day consultation concluded that day.
"We are committed to follow a path that little by little will reduce the difference between the cost and tariff," he said.
The plan calls for ramping up gas tariffs on households by an initial 203%, effective October 1. That is to be followed by biannual increases of 10% to reach market prices in October 2019 for most of the country, taking the wellhead price portion of the residential tariff to $6.78/MMBtu from a current $1.29/MMBtu.
This will gradually eliminate state subsidies on production and imports from 81% to zero by that time for most of the country, Aranguren said.
The reduction in the subsidies will be helped by a sixfold tariff hikes on companies, which account for about 65% of the 130 million-180 million cu m/d of consumption. Households consume nearly a quarter of the gas, according to Enargas, the national gas regulator.
Even so, Aranguren said the sixfold hike could be reduced for small and medium-size companies, easing the strain on their finances at a time when the economy is in recession.
The new government of President Mauricio Macri tried to raise residential tariffs fivefold in April, but widespread complaints and a number of lawsuits got the hikes suspended by the Supreme Court on grounds that a public consultation by law had to be held first.
The government is pushing for higher gas pricing to spur investment to pull up production from a 10-year low of 113.7 million cu m/d in 2014 by developing the country's huge shale and tight gas potential, as well as offshore resources.
Aranguren said during the consultation that with more local production, the country could reduce imports 'to the necessary minimum.'
Argentina imports gas to meet a third of its consumption, with half of the imports coming in as LNG.
Macri has said he wants to eliminate these costlier LNG imports by 2021-22.
