This Tuesday, the Argentine Confederation of Medium Enterprises (CAME) will meet with Flavia Royón, new Secretary of Energy. Alfredo González, President of CAME, spoke to this outlet and outlined their expectations for the meeting: “Given so much uncertainty We are going to have an explanatory meeting on Tuesday with the Secretary of Energy and the Undersecretary where they are going to explain to us how the subsidy removal format is going to be, which is going to affect all companies, mainly businesses and services throughout the country”.
González highlighted the importance of the meeting since “the information is quite confusing.”
Until now, the companies received different increases in the electricity rate according to each province. According to the head of the Chamber, some companies received increases of 20%, others of 30% and others of 50%.
In another universe, industrial SMEs are more concerned about the increase, especially for electro-intensive ones.
“The invoice that we have received corresponding to the month of July is with the increase that it had of 70% since the month of May,” said Daniel Rosato, head of IPA, who added that so far, some companies received increases that exceeded 100 % in some cases by the level of consumption.
Impact on inflation
“The increase in energy always affects costs. In the SME sector it is very difficult not to contain prices and not translate them into cost. There is no capacity to absorb,” González anticipated.
Among the problems that most accuse companies at this time is the economic uncertainty that impacts the lack of reference prices (something that has been calmed in the last two weeks), but the impact of the Central Bank’s rate hike and the lack of inputs are the most important. In this frame, energy occupies between 10% and 15% in the cost structure.
Inevitably, the increase – although less than what happened in 2017 – will have its correlate on the shelves at a time when inflation will be around 90%. According to C&T Economic Advisors, the increase in electricity per se already represents one point in the Price Index.
For industrial SMEs, mass consumption productions will have the greatest impact. “When it was increased by 70%, it affected between 10% and 15% in shelf costs but it depends on the product, some require more energy than others. In general, 10% of that increase is transferred to finished products “.
“It is impossible to absorb costs. We are talking about bills of 30, 40 million pesos. One can lose 1% or 2% of gain and not transfer, but we come with costs that are difficult to absorb because we have infused supplies that are increasing above inflation.Rosato added.
Industrial SMEs ask for a differential scheme: “Energy producing companies receive a subsidy from the state and why can’t the industry also receive subsidies to produce and export? Here we have to preserve exports. With the increase in energy and increases in inputs, cannot be produced.” From Energy, For now, sustaining subsidies to some sectors is not being analyzed.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
