Julio De Vido, the Planning Minister, said: ” The government will reinstate 100% of the subsidies it had withdrawn for the winter months of June and July and around 70% of the subsidies for August and September.”
The reversal comes after the government raised residential gas and electricity bills last year to reduce subsidies to the energy sector. It was a part of the government’s efforts to curb spending. “This measure has a fiscal cost of $129m,” De Vido said.
Irate consumers, opposition politicians and unions have criticized the government in the past for rate hikes. Consumer energy prices in Argentina have never been in line with production costs. Energy experts and economists have been pointing out this anomaly for years. Citizens of Argentina pay much lower heat and electricity rates than their neighbors in Chile.
Energy, farm and transportation subsidies cost the government an estimated $9.5 billion in 2008 and the central budget intends to curtle $1 billion out of energy subsidies in 2009.
Despite an economic recovery over last years, natural gas and power rates had remained virtually static.
