Argentina raising energy tariffs to fund investment

BUENOS AIRES Fri Nov 23, 2012 10:02am EST

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BUENOS AIRES Nov 23 (Reuters) - Argentina's government will raise long-frozen utility tariffs to fund the expansion of electricity and natural gas distribution in the energy-hungry South American country, officials said on Friday.

The energy sector in Latin America's No. 3 economy has been stretched thin by surging demand and limp private investment, which many analysts attribute to low government-imposed tariffs since a 2001-02 financial crisis.

Unveiling the tariff overhaul, Deputy Economy Minister Axel Kicillof said hefty state subsidies mean Argentine consumers pay much less for electricity than in neighboring countries.

"(We want to) create a fund that's sufficiently large to sustain not only the maintenance of the supply networks, but also the demand created by the accumulation of capital in Argentina," he told a news conference, referring to years of brisk economic growth and rising salaries.

A tariff increase has long been demanded by Argentine utility companies such as Edenor and Edesur, which is controlled by Endesa, a subsidiary of Italy's biggest utility, Enel.

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