Argentina caps gas hikes to pacify protests

By Charles Newbery

BUENOS AIRES (AA) – Argentina said Thursday it will slash recent increases of up to 2,000 percent in electricity and natural gas rates after widespread protest.

“We are a government that dialogues, that listens,” Interior Minister Rogelio Frigerio said in a statement. “When mistakes are made, we make corrections.”

He spoke after meeting with governors from around the country who had brought concerns about mounting social tension because of large increases in gas and power rates. The national government, which handles energy pricing, raised the rates in April in a bid to encourage investment to rebuild gas production and install more power generation capacity after years of shortages and swelling imports.

But with the approach of winter in the southern hemisphere, consumers to complained as gas bills arrived with increases of up to 2,000 percent -- and as they needed to burn more gas for heating.

Gas workers in the southernmost province of Tierra del Fuego walked off the job earlier this week to demand a reduction in the hikes. The job action disrupted deliveries of 12 percent of the nation’s gas supplies.

In response, the energy and interior ministries told the governors in a meeting Thursday they would peel back the increases.

The increase on gas is to be capped at 400 percent for homes and 500 percent for commerce and small and medium-sized businesses, while electricity-intensive industries will get 20 percent discounts on their power bills and poorer households will receive similar reductions, according to the statement.The reductions will be retroactive to April 1, when the increases took effect.

Energy Minister Juan Jose Aranguren said that despite the reduction, the goal of the gas and power rate increases remains the same: to recover the country’s energy security.

The administration of President Mauricio Macri, which took office in December, increased the rates to spur investment in increasing gas production after a decline since 2004 brought shortages and a surge in imports. The previous government kept a lid on the rates between 2003 and 2015, discouraging investment in a country that in the late 1990s and early 2000s was a net exporter of gas.

“Years of disinvestment has made it necessary to import electricity, liquid fuels and natural gas,” Aranguren said.

“The measures we have agreed on with the governors are designed to bring peace to the population and to create conditions to recover the energy supply in Argentina,” he added. “Our main goal is to have enough energy for the Argentines.”