Argentina to cap gas hikes to calm protests

By Charles Newbery

BUENOS AIRES (AA) - Argentina plans Thursday to announce a reduction in recent increases in natural gas rates after widespread protest, with officials now saying the hikes were excessive.

“Mistakes were made, and they are being rectified,” Federico Pinedo, the provisional president of the Senate, said on Radio Continental.

Pinedo, a ruling party legislator, said it wasn’t expected that consumers would face hikes of up to 2,000 percent on their gas bills.

The administration of President Mauricio Macri that took office in December, increased the rates this year 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.

Macri’s hikes, however, brought protests and a legal backlash. A number of provinces won court orders to block the rate hikes and gas workers in Tierra del Fuego, a big source of gas in the south, went on strike late Tuesday to demand a reduction in their gas bills.

The strike cut off 16 million cubic meters per day of supplies to the nation, which consumes on average 130 million cubic meters per day to meet half of its energy needs.

With the strike, the energy ministry warned of shortages, calling on factories and power plants to replace gas with alternatives such as diesel.

However, talks Wednesday between the national government and governors on reducing the gas hikes later led the energy ministry to say that supplies were on track to normalize.

This is being helped, too, by lower consumption by industry, the resumption of liquefied natural gas imports after a storm, and the import of 1,800 megawatts of power from Brazil and Uruguay, according to the ministry.

Macri is expected to make an announcement on the gas rates later Thursday, Ambito Financiero newspaper reported.

Late Wednesday, Interior Minister Rogelio Frigerio said in comments on television that the president’s announcement “will bring tranquility to many Argentines.

“The announcement is widely expected to be a cap on rate hikes of up to 500 percent, with lower-income households exempted from the higher prices.”

Frigerio said, however, the government wouldn’t backtrack on the hikes because they are needed to rebuild production.

Argentina has “lost self-sufficiency” in gas supplies because of “bad policies in recent years”, Frigerio said. “If we did nothing, we would run the risk of what is happening today in Venezuela, a country that has great energy potential but is running out of energy,” he added.e