Peru’s energy and mines ministry is pushing a regulatory overhaul of the gas distribution business to incentivize coverage of household consumers.

The new system will allow concessionaires that are selling to both industrial and household customers, to enter a new subsidy arrangement. Under this regime, more sales to industrial consumers will mean more subsidies for household bills, thus setting up incentives for companies to increase the number of connections, according to a press release.

“Currently, regional natural gas demand by industrial consumers is supplied mainly by natural gas and LNG sellers whose business is centered on those customers only, because they generate the biggest profits,” hydrocarbons secretary Eduardo Guevara Dodds said. “This leaves out household consumers, thus lowering social wellbeing.”

The ministry submitted a supreme decree bill for public consultation in April, a process that ended on May 2.

BNamericas reported in April the government’s position that the previous regulatory framework could impact efficiencies derived from economies of scale of the concessionaires.

Authorities argued that, if the regulation was not amended, it could send the wrong message to the market, discouraging participation in future gas expansion projects.

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