Argentina speeds up dollar impact on gas tariffs to every two months

Argentina's government is speeding up the process of passing on dollar exchange rate fluctuations to gas tariffs. A recent regulatory change will now adjust these costs every two months instead of the previous six-month cycle.

The Secretariat of Energy modified the periodicity for calculating "Daily Accumulated Differences" (DDA) in gas prices at the entry point to the transport system. This mechanism accounts for discrepancies between the gas price reflected in tariffs and what distributors actually pay producers. The adjustments will now be incorporated into user bills every two months, rather than seasonally.

This new rule, effective from August tariff approvals, will first address accumulated differences up to May. Government officials anticipate a minimal impact, close to zero percent, on user bills. They argue this change avoids a "double seasonal effect", combining increased consumption and higher gas prices in winter, promoting more gradual and predictable costs for consumers.

The DDA mechanism, originally designed in the 1990s for stable economic conditions, has caused significant issues in recent years, particularly during periods of rapid currency devaluation. Distributors have sought faster adjustments to avoid bearing the financial burden of paying higher gas prices without immediate recovery from customers. Separately, accumulated differences related to higher liquefied gas costs in winter will be spread over six installments starting in October or November to maintain a flatter annual tariff.

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avoids the 'double seasonal effect' (due to consumption increase and gas price rise in winter) and seeks greater gradualism and predictability for the end user.