Rich face higher energy bills after Milei subsidy cut

President Javier Milei will cut energy subsidies for all gated communities in the Greater Buenos Aires region, a move that will hit a portion of Argentina’s upper class that for years has been paying a fraction of their gas and electric bills.

The move will affect 15,500 energy users and save the government about US$2.6 million per year, spokesman Manuel Adorni said in announcing the measure Wednesday at a regular press briefing.

Puerto Madero, a posh neighbourhood that’s become an extension of the capital’s downtown financial district, will also be excluded from government aid. About half of those users had previously been considered low-income, and the other half middle-income.

“Energy is expensive and those who can pay for it, should pay for it,” Adorni said. “This policy marks the end of privileges that some politicians enjoyed just because they lived in Puerto Madero or gated communities,” he added, in a nod to Milei’s Peronist predecessor, former president Alberto Fernández, who is said to reside in a friend’s luxurious apartment in the neighbourhood.

Milei already eliminated a big chunk of energy subsidies for the richest households. But difficulties in categorising exclusive gated communities that neighbour low-income areas have allowed some high-earners to continue to avoid paying full price. The government used geo-location technology to make the change, according to a separate statement by the energy department. Households will have the opportunity to appeal with proof.

Through aggressive spending cuts, Milei’s government achieved Argentina’s first budget surplus since 2009 last year and continues to put the national accounts in order to wrestle inflation down to multi-year lows. Cuts to energy subsidies are playing a key role. From last April, real spending on energy fell 78 percent, according to the Instituto Argentino de Análisis Fiscal, a consultancy firm focused on budget analysis. Lower spending on energy rank second behind cuts to social welfare in helping the government achieve its surplus, it found.

Wednesday’s measure also offers Milei some publicity and goodwill with voters in Buenos Aires Province, where most of the gated communities are located, ahead of local elections in September. The libertarian outsider rose to power in part on a pledge to bring an end to the “decadence” long enjoyed the country’s wealthy and its political class.