State Refinery Wants To
Set Gasoline Prices
Every Two Weeks To Avoid
Additional Costs To
ConsumersWhile
the government looks for
way to reduce fuel
consumption and the
price of gasoline at the
pumps, the state
refinery, efinadora
Costarricense de
Petróleo (Recope), is
looking for ways to
minimize its losses, by
proposing to fix
gasoline prices every
two weeks instead of the
current practice of
every second Friday of
the month.
The current system of
price fixing was
introduced last August
and has meant an
accumulated loss of
us$64 million dollars to
the state institution.
The automatic formual
for price adjustments
allows Recope to asks
the regulatory agency a
price adjustment - up or
down - only once a month
and always on the second
Friday of the month.
Once approved, the price
adjustment usually is in
place by the first week
in the following month.
In this way, consumers
can adjust their
budgets. However, the
system is causing losses
for Recope as the world
price of crude oil is
continually moving
upwards.
Thus Recope is
suggesting that the
Autoridad Reguladora de
los Servicios Públicos (Aresep)
it be allowed to request
a price adjustment the
second and last Friday
of each month.
Recope is also
requesting that the
Aresep reduce its
approval period allowing
the state refinery to
better manage its line
of credit. The two weeks
request would fall in
line with Recope's
importation of products
every two weeks.
Currently, the Aresep
receives a request from
Recope every second
Friday, to which the
regulator makes a
decision within a week
to 10 days and then
stalls the required
publication in the
official government
publication, La Gaceta,
another week or more.
The regulador general,
Fernando Herrero, says
that too many price
adjustments is not
healthy, allowing for a
"psicosis inflacionaria"
(inflationary
psychosis"psychosis) as
was the case with the
earlier model of setting
gasoline prices.
Herrero added that more
the problems are with
Recope not managing its
cash flow well. The
regulador general
suggested that Recope
request that Aresep
financial experts
analyze their cash flow
problem.
Recope may face even
greater financial
problems if the
government fails to
transfer to it in time
the ¢10 billion colones,
the cost of the subsidy
that eliminated the ¢85
colones per litre price
hike of diesel fuel,
which would leave the
state refinery with a
hole of ¢8.4 billino
colones.
Recope will then be
forced to make up the
shortfall with loans
which will make matters
even worse for the state
agency and will be
eventually passed on to
consumers, according to
Jorge Blanco, gerente de
Comercio Internacional y
Desarrollo.
Blanco suggests that
price changes occur
rapidly as the costs of
the delays will sooner
or later be passed on to
consumers.
In the first five months
of the year Recope spent
us$1.4 billion dollars
in purchases, the total
spent in 2007, and is
estimating that the
final bill for the year
will be us$2.8 billion. |
