Subsidy Removal Could Lead to Increases Exceeding 500% for Homes, Industries, and Businesses

Surprise Gas Rate Increase Ahead: Tripling of Prices Expected for High-Income Households, Businesses and Industries as Subsidies are Removed in April

On Tuesday, the Government is set to sign resolutions that will result in an increase in natural gas rates per network starting on Monday, April 1. Despite the delay of two months, officials are now preparing to implement the increases as subsidies for high-income households, businesses, and industries will be removed. This move is expected to cause gas prices to at least triple next month, with another extra jump between May and September.

The official definition of the rate increase comes two months late due to concerns about inflation and the financial situation of the energy sector. The Ministry of Energy and National Gas Regulatory Entity (Enargas) were prepared to implement the increases in February but were delayed by Minister of Economy Luis Caputo’s decision to wait until inflation was anchored at lower levels. However, officials have now decided that it is time for the changes to be made.

The Energy resolution 41/2024 establishes new wholesale gas prices at the Point of Entry to the Transportation System (PIST), which are a key part of the bill along with transportation, distribution, and tax margins. Officials have not yet clarified how this resolution will affect users differently, but some households may see a near tripling of gas prices starting in April.

Overall, gas prices are expected to rise significantly for all users between May and September with some paying over four times their current rate depending on their location. The resolution is a part of the Government’s efforts to reduce energy subsidies and realign rates with actual supply costs despite concerns about its impact on low- and middle-income households.

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