After the result of the referendum with the non-repeal of 135 articles of the Law of Urgent Consideration (LUC) The Executive Power ratifies a series of regulatory changes related to the setting of fuel rates, the implementation of a fiscal rule to keep State spending at bay, the right for mobile phone users to change company while keeping your number and the option to collect wages in cash and not necessarily through a bank or an electronic money issuer.
Until now, the government applied (partially) a new system for setting fuel rates seeking to match the evolution of gasoline and diesel in a (theoretical) import market. That was the the middle path found by the coalition government (with the votes of the Broad Front) to set aside the original idea of the National Party to demonopolize fuel imports held by Ancap.
“We are not going to change. It is the formula that Parliament voted unanimously; it is a measure of transparency,” defended the President of the Republic Luis Lacalle Pou this Sunday at the press conference in the Executive Tower after the result of the referendum.
definition week
With or without the articles referring to how fuel rates are set in the LUC, the Power The Executive will have to decide this week what to do with the rates of gasoline and diesel, again in a scenario where the numbers play against it. This Tuesday, the Regulatory Unit for Energy and Water Services (Ursea) will publish the Import Price Parity (PPI) report for the last window period that ended on March 25 with the evolution of refined fuels on the Gulf Coast from Mexico.
ORA survey published by El Observador with the evolution of a simile of Super 95 gasoline -which takes the Ursea in its PPI- and diesel anticipate that the rates would have higher increases of 19% and 26%, respectively, if the government chooses to transfer 100% of what the PPI photo shows in the pumps of the Uruguayan stations since April.
However, this It will not be the only variable that the government will be able to put on the table to define how much fuel should rise, since it will also take into account a report from Ancap, which anticipates that the back to keep rates frozen looks increasingly complex, as it was able to do during the last quarter of last year.
President Lacalle Pou indicated that in recent times Uruguay managed to have “cheaper” fuels than in Brazil, something that did not happen two decades ago, and that this was possible thanks to the “back that Ancap kept” so as not to transfer the entire increase registered by crude oil in international markets, since its price rose from US$ 44 to US$ 115 per barrel. In March, the Executive had raised fuel prices for the second consecutive time so far this year.
Beyond the unfavorable context that the government had to implement a new system that sought to give greater transparency to the setting of fuel rates (first due to the pandemic and then due to the spike in oil), in In practice, the government is still discretionary when it comes to setting the rates for a variable that is sensitive to the pockets of Uruguayans.
Once the government will find itself faced with a complex dilemma to resolve: begin to strictly apply a new, more transparent methodology to set rates or weigh other variables whose impact is no less. In the midst of a global inflationary escalation, a total truthfulness of the photo that shows the international fuel market can add more gasoline to the fire.
In fact, the Executive Branch plans to announce new measures to moderate the price adjustments of different items in the consumer basket this week, after last week the removal of VAT from roasts began to take effect.
“This week there will be an important meeting on prices,” said Lacalle Pou this Sunday.
The great challenge that the Lacalle Pou government will now have ahead of it will be to eliminate the weight of political discretion when setting fuel rates so that this mechanism of greater transparency can be effectively understood by the population regardless of the trend ( bullish or bearish) that shows the price of oil and its derivatives.
