Political Risk Latin America Blog @PolRiskLatam

Argentines brace for energy price hikes

Posted in News and Articles, Political Risk by politicalrisklatam on September 28, 2010

by Jude Webber for Financial Times, September 28th, 2010.

Purple posters with a drawing of candles on them have gone up on billboards around Buenos Aires. Their message is simple: Most residents have got used to paying less over the past decade for their electricity than the cost of a couple of candles.

Campaigns to educate Argentines to use energy rationally have been largely absent in a country where, since the company crashed into a historic sovereign debt default in 2001, tariffs have remained largely frozen. There is so little incentive to use energy wisely that, the joke used to go, if in winter you were hot, you kept the heating on and simply opened the window.

That will change, to some extent, this Friday, when the government unwinds some subsidies applied during the winter months to mitigate its last attempt to hike prices – which ran into fierce opposition from consumer groups. The heaviest users can expect a hefty 200 per cent rise, while medium users will see their bills go up by some 50 per cent. In a country where inflation – inexorable, although officially denied, and running at some 20 to 25 per cent according to private analysts – is eroding purchasing power, the latest attempt to push up bills is not going to go down well. (continue reading… )

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