USD 2 431 million less in sub-funds after adjustments in gasoline

Ecuadornews:

Finance adjusted the amount estimated for the subsidies contemplated in Pro forma 2019, approved last November in the Assembly. The document reflects a reduction of USD 2 431 million in relation to the amount budgeted for this item in the initial Pro, presented in October 2018.

The adjustment is explained, mainly, by the changes in two derivatives: naphtha and diesel; fuels in which the State spends more. Initially, the Treasury budgeted USD 6,955.42 million for subsidies in 2019.

According to the first Pro Forma, USD 4 176.4 million corresponded to fuel subsidies; that is, 60% of the total. The remaining 40% corresponds to another 11 grants for the social and agricultural sector. In the new document, which Finances published on December 28, USD 1,131.3 million is eliminated to subsidize imported naphtha; that is, extra gasolines, ecopais and super.

The amount allocated to the diesel subsidy is reduced by 49% in the new Pro forma. With these changes, the Treasury sets in motion the cuts to the subsidies of these two derivatives, announced on December 18 and formalized in Executive Decree 619.

According to the Finance Portfolio, the reduction is explained because in the first Pro forma in this way, the amount of these subsidies was calculated with a price of USD 58.29 per barrel of oil. However, the price was adjusted to USD 50.05 per barrel, on the recommendation of the Legislative. “It is required to make the necessary corrections, all to maintain the deficit target of 2019, of 3.2% of GDP,” said the entity.

Decree 619 established that the price of the gallon of extra gasoline and ecopais will go from USD 1.48 to 1.85. For carriers transporting passengers or goods, the previous price will be maintained. To access the compensation, the Government will give the beneficiaries a card. The list of those who will have the preferential price will be made with information from several state entities.

In the case of super gasoline, its price will be fixed monthly by the state company Petroecuador. In addition, marketers may establish a profit margin freely, depending on supply and demand. This will cause prices to vary. The price of diesel will also have adjustments this year, said the Minister of Energy, Carlos Pérez.

Petroecuador authorities and the Hydrocarbons Regulation and Control Agency (ARCH) are scheduled to meet tomorrow with representatives of the fuel marketers to agree on the marketing margin that will be applied as part of the formula for calculating the retail price of the new fuel value of diesel.

The Government will apply the same compensation mechanism that it announced for taxi drivers, with the urban, interprovincial, intercantonal and heavy-load transporters that use diesel. The users that will pay the price of the diesel without subsidy will be the ones of particular cars, transport of heavy load with international plates and of domestic amount.

This price will be fixed monthly by the public company Petroecuador. The measures still cause concern. Guilds of urban transporters, heavy cargo, taxi drivers and others will meet today in the Presidency. On December 28, the National Federation of Heavy Transport of Ecuador, which will participate in the meeting today, resolved to urge the Government to amend Decree 619 and eliminate the provision for increasing the price of fuel.

According to Carlos Brunis, president of the Union of Transport Cooperatives in Taxis of Pichincha, most taxi drivers do not agree with the card compensation mechanism. Brunis points out that one of his proposals is for the Government to provide that the service provided through mobile applications does not continue to operate in the country. “It is an attack on our economy.”

This union plans to meet before January 7 to raise a formal position. Today they will only listen to the Executive’s proposals. The Government aims to save around USD 1 850 million a year in the delivery of subsidies for extra gasoline, ecopais and diesel. The Minister of Finance, Richard Martinez, said that the subsidy for domestic gas will not be adjusted. (I)

Source : https://www.elcomercio.com/actualidad/usd-431-millones-subisdios-ajustes.html