Naturgy Welcomes Argentina Tariff Decree

Argentina's decision to allow gas distributors there to pass through gas price increases to consumers has been welcomed by Spain's Naturgy (formerly known as Gas Natural).

Naturgy, which owns gas distribution interests in Argentina, said November 20 that it welcomed the government's publication four days earlier of Decree 1053/2018 , adding that it "reinforces the stability and credibility of the country with the international investor community."

The decree, adopted November 16, means it will permit the pass-through of the difference between the wholesale gas price paid by distributors and the [lower] gas tariff from April 2018 to March 31 2019 caused by the fall in the value of the Argentinian peso.

Naturgy said in the first nine months of 2018 it took a prudent approach, by impairing its pre-tax earnings (Ebitda) by €116mn ($133mn) and its net profit by €57mn. Now the decree has been published, it will remove the impairment charges which will have a positive impact on its 4Q and full year 2018 results. 

Two weeks ago Naturgy said in its 3Q results that Argentina’s energy ministry had already accepted the principle on October 4 that distributors were entitled to pass through such costs into final gas tariffs.

Gas Natural BAN, which distributes in 30 municipalities in the north and west of the Buenos Aires metropolitan area, had more than 1.5mn residential, over 52,000 commercial, 700 industrial customers, 400 vehicular 'CNG' stations at end-2017. It has been present in Argentina since 1992.   MetroGas, the largest gas distributor which covers the capital itself, is controlled by Argentina's state YPF.