Argentina Continues Endless Energy Price Hikes

Argentine’s Energy Minister Javier Iguacel tells the press that energy prices in Buenos Aires will go up again, this time by 30 percent by year's end.

RELATED: 
'73,800 Argentine Jobs Lost Since 2015 Under Macri': Report

Trying to minimize the steep rise in gas and electricity costs for the city dwellers, Iguacel said that gas hikes "will not be more than 25 percent, while the increase in electricity will be less than 30 percent."

The newly appointed minister said the increase is meant to “adjust...for inflation."

He admitted that these "increases will add to those already in place."

The Mauricio Macri administration has put its economic austerity plan into high gear over the past year slashing energy subsidies that have caused energy, water and gas bills to rise by more than 1,300 percent since November alone in some areas of the country. According to the government within the first few months of 2016 alone, some 11,000 public workers were laid off.

The president is now also trying to satisfy the terms of his government’s newly acquired US$50 billion IMF loan, which requires a deficit reduction to 1.3 percent of current GDP by 2019. More than 73,800 private sector jobs have been lost since Macri took office, mainly in manufacturing, which has lobbied for rules that favor labor flexibility.

Macri said last January, “Austerity has to be part of politics.”    

On Tuesday the energy minister added, "gas bills are now coming in, which is hard," referring to Argentina’s current cold winter months.

Iguacel explained: "gas and electricity bills have three components: the cost of energy, transportation, and distribution. Transportation and distribution are contracts that were re-negotiated in pesos and adjusted in pesos for inflation."

The novice minister then alluded to further price increases down the road. "There are still adjustments to be made" in both gas and electricity, he told reporters.

Iguacel went on to blame the previous administrations under Nestor Kirchner (2003-2007) and his wife Cristina Fernandez (2007-2015) for the current price jumps saying they are managing a "heavy inheritance" from these prior presidents.

"This government has not dollarized energy. In fact, Kirchnerismo hyper dollarized energy, which made us dependent on external energy imports spending 6 billion dollars each year."

The energy minister added that "in the case of gas, thanks to (extraction) investments that are being made, we have the opportunity to get out of the need to import. Only in winter will we have to import, and less and less.

"We expect the price to go down considerably, and by lowering the production price, we expect a predictable bill this summer and we expect that in the coming winter, it will be in pesos similar to this year," he said.

But many Argentines won’t be able to wait for prices to go down in coming months as the poverty remains high at 29 percent.

Inflation has hovered around 25 percent for the past year - it’s currently at 28 percent - and the peso plunged to 27.5 percent to the dollar in recent months. Many residents near Buenos Aires are being forced to participate in barter clubs in order to afford basic household goods such as sugar and flour.

Experts are expecting a recession  any minute for South America’s second-largest economy.

Iguacel said that this year country will "be able to export to Chile," saying he had just met with his Chilean counterpart, Susana Jimenez. Last week the two met to discuss transporting natural gas from the Argentine’s Neuquen basin to Chile by October.