MercoPress. South Atlantic News Agency

Argentina: first hike in gas prices in five years appealed

Gas prices controvesy

Argentina's National Ombudsman Eduardo Mondino filed Tuesday an appeal with the courts seeking to stop a retroactive hike in gas prices that the President Nestor Kirchner administration authorized in the province of Buenos Aires.

"This decision had already been questioned by us because it does not meet all the legal requirements" Mondino said, adding that the request "was sent to Congress where it did not obtain approval but the government implemented it through a legal strategy that is clearly unconstitutional." Mondino emphasized that "in the public hearing there had already been strong discussions due to the unfair nature of the tariff structure." The official alleged that most of the hike is applied to the fixed charge and not on the gas consumption. The Kirchner administration decided the first increase in household gas charges in eight years last Monday under cover of the massive protests and strikes over the death of a teacher, allegedly killed by tear gas canister fired at short range. The increased price of gas marks the first clear break of five years of stubborn refusal to update domestic gas charges following the default and financial crisis of early 2002 when all public utilities rates were frozen, and remain so. The long overdue charges, 14% on average with minimum billing rising 33% and all backdated to November 2005 are expected to bite deep in consumers' pockets. The Argentine press wonders why the sudden decision and is asking if the Argentine energy situation is so serious that the Kirchner administration must raise the price of gas precisely a few months from October's presidential election, possibly with the purpose of luring investment to help expand the industry and avoid further supply shortfalls this coming winter. Or does the Argentine government's main concern rest in protecting the relationship with Spain (whose Gas Natural BAN is a major stakeholder in the sector), and one of the few friends of the Kirchner administration abroad.