MercoPress. South Atlantic News Agency

Argentina hikes gas export tax to ensure domestic demand

Argentina will raise taxes on the country's natural gas exports in an effort to ensure domestic energy supplies, Planning Minister Julio De Vido said on Monday. The amount of the increase was not immediately disclosed but the move hiked taxes already in place on Argentine natural gas exports.

The announcement came as part of the President Cristina Fernandez de Kirchner administration plan aimed at bolstering energy supplies in Argentina ahead of winter when shortages (as in previous years) are forecasted. Argentine provision of gas has been insufficient to cope with the rapidly expanding economy but has also been hit by years of poor investment since energy prices for residential consumers have remained virtually frozen since the 2002 meltdown of the Argentine economy. Hoping to stimulate investment, De Vido announced the government will loosen restrictions on any new fuel projects aimed at providing energy to the Argentine domestic market. "Our energy equation shows we export more than what we import, therefore the increase in export taxes in the framework of the new saving plan", said De Vido. To keep gas flowing to heat Argentine households, Argentina in recent years has reduced natural gas exports to Chile, and increased imports of the fuel from Bolivia and its purchases of diesel to replace gas to power generators. Argentine recently signed an agreement with Venezuela to exchange food for energy. Last year, Argentina rationed supplies to factories to help guarantee normal service to homes as temperatures dropped, affecting industrial output. The government has repeatedly announced new investments to increase energy flows and assured supplies will be sufficient, but businesses and analysts have expressed concerns about the possibility of new cuts this year. "Energy supplies for our families, our industries, our business, will be there when the demand comes," De Vido said "The announcements refer to the price of natural gas in new wells or in those which have not been in production since 2004", said Jorge Sapag governor of Neuquen, which has Argentina's main gas producing areas.