Argentina to Raise Electricity Bills by as Much as 500 Percent

[Judi Lynn]

Source: Bloomberg News

Argentina to Raise Electricity Bills by as Much as 500 Percent
by Charlie Devereux
January 29, 2016 — 3:48 PM CST

Subsidized electricity cost state $51 billion over 13 years

Govt plans to save $4 billion in 2016 by cutting subsidies

Argentina will raise electricity bills by as much as 500 percent in the greater Buenos Aires area as the new government seeks to eliminate a system of subsidies it said cost $51 billion over the past 13 years.

Rates will be divided into seven categories and users who cut consumption will receive discounts while about 900,000 consumers categorized as poor out of 4.2 million consumers will continue to receive assistance, Energy Minister Juan Jose Aranguren said at a news conference in Buenos Aires. As an example of the increase in rates, he said a user who consumes 180 kilowatts of electricity per month will now pay 150 pesos ($10.80), up from 25 pesos ($1.80) previously.

After Argentina posted the worst fiscal deficit in 30 years in 2015, newly-elected President Mauricio Macri is seeking to trim spending this year by reducing subsidies in energy and transport introduced by the previous government. The rise in electricity prices will allow the government to save about $4 billion this year and power companies to invest in a system that’s on the point of collapse, Aranguren said.

“We’re beginning on a path in which we can recover the economic cost of production and reassigning the subsidies the population receives,” he said.

Read more: http://www.bloomberg.com/news/articles/2016-01-29/argentina-to-raise-electricity-bills-by-as-much-as-500-percent

[forest444]

1. Ostensibly for "deficit reduction"

While giving his main backers - big agro and the landowning elite - a $10 billion tax cut.

His answer to teh political fallout? Lie about the deficit he inherited from Cristina Kirchner by excluding Social Security and Central Bank surpluses, plus counting 2016 tax refunds as part of the 2015 deficit (which, of course, already includes the 2015 refunds). Some on DU might recall that Bob Dole tried the same thing against Bill Clinton in order to argue that "deficits weren't coming down."

Macri can always count on lazy foreign desk writers (especially from business rags) to echo this sleight of hand.