Argentina to cut subsidies on natural gas consumption

4/6/2016

BUENOS AIRES (Reuters) -- Argentines will pay sharply higher rates for natural gas consumption, according to subsidy cuts recently announced by the government as part of new President Mauricio Macri's fiscal austerity plan.

Heating prices will go up by 300% in some areas, after years of generous subsidies that kept the gas bill for millions of Argentines nearly frozen under the previous government of Cristina Fernandez, a free-spending populist whose policies are being reversed by Macri's center-right government.

Argentina has the lowest public service prices in the region, and the increases announced on Thursday will not apply to low-income households, Juan Jose Aranguren told local radio.

"Due to the fact that gas rates have been low, demand has increased to the point where it cannot be satisfied by local natural gas production," Aranguren said.

In February, he said the government aimed to reduce power subsidies by $4 billion this year.

Macri, elected in November on a free-markets platform, has lowered export taxes, ditched trade and currency controls and cut the public payroll in an effort to attract investors to the country. Years of under investment have sapped energy production and resulted in blackouts during months of peak electricity use.

Commuters in Argentina's capital will see a 100% increase for train and bus tickets starting next month, Macri's team said on Thursday.

The increase in the cost of public services has further angered thousands of former state employees who have been fired as part of the president's austerity program. Regular protests are being held by the former employees, slowing traffic around labor and finance ministry buildings in Buenos Aires.

(Reporting by Walter Bianchi and Jorge Otaola, writing by Hugh Bronstein; Editing by Chizu Nomiyama)