The difference of six points Between the increase in the electricity rate that Minister Guzmán is seeking and the one that Undersecretary Basualdo is seeking, a crisis of proportions has been unleashed in the Government.
It is even more surprising when you consider that those rates have been frozen for two years and that if it goes up 15% as Guzmán wishes, the rise would be neutralized with the inflation of the first four months of this year of 16%.
The Government planned allocate $ 450,000 million to electricity subsidies. That is what the budget that is approved by Congress says, based on projections made by the Minister of Economy, Martín Guzmán. With the 9% increase in rates, everything indicates that this estimate will fall short and more resources will be required. The idea of Economics was an increase of between 30% and 40%.
The current bid between Federico Basualdo, Deputy Secretary of Electric Energy, and Guzmán is for a percentage lower than that desired by Guzmán. Basualdo wants a single increase of 9%, while Guzmán think of two, or some sequence that ends at 15%. Either way, with neither of those two increments it will be possible to cover what is assigned in the budget.
The position of Kirchnerism -represented by Federico Basualdo, but also Federico Bernal (controller of Enargas) is that the budget can go “Modifying through the reassignment of games”. Although they do not say so explicitly, both understand that the Economy has to look elsewhere before cutting public spending to subsidize rates.
From Economy they let it be known that the electricity regulator (Enre) did not work on criteria of “segmentation” of subsidies. Soledad Manín is the inspector of Enre, who usually works very alienated with Basualdo’s criteria.
However, regulators were asking companies for information to apply segmentation criteria. “The idea is the same rate table for everyone, but different levels of subsidies according to income. A subsidy for beneficiaries of social plans, another for retirees, another for salaried workers earning the minimum. That work is there ”, they explained more than once in the Ministry of Energy – whose head Darío Martínez is in a tense situation – and in the regulatory entities.
Simulations of subsidies were even tested in the tariff tables, which did not give expected results. “There is a part of the middle class that voted for the government coalition because it promised a totally different rate policy from (Mauricio) Macri. Kirchnerism is fulfilling that campaign promise, it is the only one it can handle ”, says an executive of a company that deals with officials.
Any segmentation can leave customers “hurt.” There will always be sectors that will be considered to have a certain purchasing power – because of the neighborhood in which they live, or because they occupy a large house – that do not perceive themselves with those characteristics. The numbers may indicate that your pockets can handle higher power and gas surges, but those people don’t see it that way.
When Cristina Fernández de Kirchner won her re-election and started her second term, she promised “fine tuning”. It was a search for subsidies to be less heavy on fiscal spending. He entrusted the task to Axel Kicillof, his bishop in managing the economy. They didn’t find a recipe that worked.
The province of Buenos Aires announced a 7% rise in electricity distribution. It affects the entire territory, except the suburbs. This decision was made in tune with the mark that Enre and the Ministry of Electric Energy had already been marking.
In 2015, the coverage of the wholesale cost of electricity through the tariff paid by the users was 32% in the national average. In other words, almost 68% of the electricity bill was paid by the State. This number does not reflect what was happening in the city of Buenos Aires and the suburbs: the state subsidy was close to 90%. That is because the provinces did increase, while the metropolitan area of Buenos Aires (AMBA) did not.
The budget projection was that users pay approximately 43% of the electricity cost. That number meant increases in rates higher than those that are on the way. If the corrections that the Government has been handling continue, what users pay will once again represent about one third of the cost, as was the case in 2015.
The keys to the conflict
- Energy subsidies represent $ 450,000 million in the budget
- Neither a 9% nor a 15% increase will meet the grants that are in the budget
- Kirchnerism wants the Economy to reallocate budget items to maintain single-digit increases
- The Government has segmentation jobs. But the application of the same could generate discontent among voters of the ruling coalition.
- The rate paid by customers was going to cover 43% of the electricity cost, if there was a double-digit increase.
- The province of Buenos Aires, the Ministry of Electricity and the Enre set similar guidelines for increases.
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source https://pledgetimes.com/a-difference-of-six-points-caused-a-huge-crisis-in-the-government/
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