A few days away from the public hearings that will define further increases segmented for electricity and gas users, the Ministry of Economy additional guidelines on households that will stop receiving subsidies. This is how it progresses ten% of those who earn the most will have to Pay in regards to $6000 per month in each service.
Martín Guzmán’s portfolio proposal for reduce state subsidiesas agreed in the agreement with the IMF, aims to identify the “10% with the greatest ability to pay” on the basis of the combination of information equity and disposable income.
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In other words, this will be done according to geographical criteria, as had been proposed by those in charge of Energy who respond to Kirchnerism, and socio-economic criteria.
According to a technical report from the Ministry of Energy, which will be debated during the public hearings, the sector with the greatest purchasing power is identified as the one with income above 3.5 total basic baskets measured by INDEC. In March, this amount was equivalent to approximately $314,000.
Who will be removed from electricity and gas subsidies
If Guzmán’s plan is successful, users who will no longer have subsidies and pay the full price will have to meet one of the following criteria:
- Reside in considered geographical areas high paying polygons identified by the National Electricity Regulatory Entity (ENRE) on the basis of the value per square meter. would be certain 500,000 households in CABA and surrounding areas, including countries.
- To have Income greater than the equivalent of 3.5 Total basic baskets (TCC) for a household of four members. In March, that value rose to $314,000.
- to be the owner of planes or boats luxury.
- to be the owner of 3 or more properties registered.
- To have 3 or more motor vehicles less than five years.
According to the technical report of the Ministry of Energy, the defined income threshold as “the amount of cash-based transfers Can be changed in order to reduce inclusion errors in the less subsidized segments or to increase the scope of this segment”.
The rest of the users, i.e. those below $314,000, considered the middle segment, will see a partial reduction in subsidies, while lower-income sectors will continue with the subsidized rates.
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How many people will no longer have electricity and gas subsidies
According to the proposal of the Economy, the universe of holders who will no longer receive energy subsidies and will pay the full price in the metropolitan area of Buenos Aires will be:
- 921.778 in electrical energy;
- 760,600 gas holders through the networks.
Moreover, in economics, it is said that for users to whom the subsidy is removed and considering that it does not correspond to them will have “a agile mechanism for complaining and requesting reconsideration” the situation.
The technical report points out that the current system of universal subsidies for the wholesale price of energy is “pro-rich and progressive: people with the highest incomes are the most protected by the policy”. “When subsidies exhibit pro-rich behavior, it means that it is possible to review its distributional impact in terms of reduction of inclusion errors“, adds the proposal.
What tariff increases has Martín Guzmán agreed with the IMF?
The program signed with the IMF, of which first check It will be towards the end of mayonnaise, is one of its objectives decrease in subsidies energy, which in 2022 could exceed 16.7 billion US dollars price increase due to war in Ukrainewhat i could lead to higher earnings than expected so far.
To reduce the grant account, a additional and segmented increases scheme from this 2022, which will be added to the general who governs from March 1, with the following characteristics:
- Remove 10% subsidies top of the residential consumers urban with the greater ability to pay.
- Atar to the evolution of salaries increase for the rest residential users: it cannot exceed 80% of the average wage growth measured by INDEC in 2021. It is estimated that So the rate hike Annual will be more than 40%.
- For the most relegated sectors which they already receive the social tariff, rising gas and electricity prices cannot exceed 40% the INDEC wage variation coefficient (CVS). It is estimated that raised in light and gas for this segment will remain at 20%that is to say the same since March.
- the IMF staff report remarks that “it is expected that additional increases of energy come into force on June 1after the convening of a public hearing on May 10, 11 and 12.