The Government called a public hearing in order to examine the rate adjustment proposal presented by the company AySA, in charge of providing water and sanitation services to a population greater than 3.8 million homes in the metropolitan area of Buenos Aires (AMBA).
The date was made official through the Official Gazette this Tuesday and was set for March 27, 2024 at 10:00 a.m. The objective of the hearing is to discuss the Tariff Adjustment Proposal presented by AGUA Y SANEACIONES ARGENTINOS SA (AySA).
Key points of the call
- Aim: consider AySA’s rate increase proposal and its rationale.
- Place and date: March 27, 2024 at 10:00 a.m., through a digital and streaming platform.
- Authorities: The hearing will be chaired by Eng. Luis Giovine, Secretary of Public Works.
- Inscription: Those interested in participating as exhibitors must register at the ERAS headquarters from March 11 to 25, 2024.
The antecedent
Two weeks ago, the Minister of Economy, Luis Caputo, rejected the proposal for a 138% rate increase that the state company had made to the then Ministry of Infrastructure. However, after passing that portfolio under the orbit of Economy, Caputo rejected the suggestion and the company must design another scheme with a smaller adjustment variable.
The company had calculated the rate increase based on expenses and investments at December 2023 prices, as they had said, and justified the request by saying that “inflation in 2023 was higher than expected (222% annually), so tariff revenues are insufficient to sustain operating expenses.”
AySA rate increases are decided by the Ministry of Public Works, which now depends on the Ministry of Economy. The Secretariat transmits the order of what rate to apply to the water and sanitation regulatory body (ERAS), who details the new rate table to AySA.
How much is the proposed increase for AySA?
AySA prepared “a new, superior proposal for tariff recomposition and efficiency improvement”, which includes the guidelines received from the Ministry of Public Works. It consists of:
Additional budget savings: On the budget of operating expenses and investments in improvement and maintenance calculated from the amounts of 2023, a gradual reduction in expenses will be applied starting in February 2024, achieving in the last months of the year a reduction of around 20% in real terms (to prices for March 2024).
Increase in tariff level: a effects of achieving economic balance between the months of September and October 2024, considering the efficiency improvements from the previous point, and at March 2024 prices, An increase in the modification coefficient K of 209% is requested.
Update mechanism: Regarding nominal updating, in accordance with the guidelines received, the application of a monthly updating factor applicable from the month of May is proposed considering an index composed of three INDEC indicators: the Consumer Price Index (CPI), the Domestic Wholesale Price Index (IPIM), opening D “Manufactured Products”, and the Wage Index. The weights will be: the CPI 11%, the IPIM D 44% and the IS 45%.
At the same time, the distributor also proposed setting a another mid-year rate review pointing out that “given the ambition of the efficiency process initiated, the high macroeconomic volatility and the ongoing relative price changes, it is proposed to establish a mandatory complementary tariff review for the month of July 2024.”
In turn, the company recommended a strengthening the social tariff program, with an increase in the budget and greater facilities for access. While he also raised the need to preserve for the entire period included in the rate correction the special 15% discount for residential and vacant users whose properties are located in areas qualified with low zonal coefficients.
From AySA they revealed that “as a result of the measures in terms of reducing subsidies compared to the current situation, an estimated saving of $440,000 million at March 2024 pricesbetween additional efficiency improvement and tariff increase, generating a significant improvement in terms of equity.”
However, they clarified that “despite these efforts and taking into account the guideline defined by that Application Authority for the tariff program, it is remembered that to achieve the financial balance of the concession It will continue to be necessary for the National Treasury to complete the uncovered deficit with transfers, both for the months in which balance has not yet been reached in terms of operating expenses and investments in improvement and maintenance and for the financing of basic works and expansion and service. of debt”.
Source: Ambito
