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Argentina to Remove Subsidies on Electricity
   2016-01-30 19:33:17    CRIENGLISH.com      Web Editor: Guo Jing

Shoppers browse at an electronics and appliance store in Buenos Aires, Argentina, on Thursday, Dec. 17, 2015. [Photo: CFP]

Argentina's energy minister on Friday announced that the country will remove electricity subsidies.

Juan Jose Aranguren said the government of newly-elected President Mauricio Macri aims to reduce subsidies by 4 billion US dollars this year, as part of a drive to reduce a gaping deficit that widened sharply under the government of former President Cristina Fernandez de Kirchner.

Aranguren said the subsidies were not directed towards low-income consumers, but mostly benefited high earners.

"With the new pricing policy we are hoping to be successful and meet the guidelines that we have set, to save $4 billion dollars. Now, remember that the subsidies are not money that the state gives to its citizens graciously. It is a re-allocation of resources from one part of the public to another part of the public. In the specific case of electricity, this re-allocation of resources has been from low-income sectors to high-income sectors which receive the majority of subsidies."

He explained the old subsidy system had favoured residents of the capital Buenos Aires, who typically pay rates five times lower than in other provinces.

Leading utility firms Edenor and Edesur, which distribute power to metropolitan Buenos Aires have posted losses for several years as power rates stayed low even as inflation surged.

Aranguren added that the rates would be reviewed again in six months time.

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