In 20 years, more than S/32,000 million were allocated in exemptions and subsidies to fuelsrevealed a report from Peruvian Institute of Economics (IPE), commissioned by the Peruvian Hydrocarbon Society (SPH).
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57% of this amount, that is, more than S/18,000 million, belong to the Fuel Price Stabilization Fund (FEPC), which was created in 2004 as an extraordinary measure and was subsequently extended.
32% refers to the tax expenditure associated with VAT and ISC exemptions in the Amazon, while the VALE LPG program represents 7%, and the ISC exemption on diesel represents 4% of the total.
In this regard, the general manager of the IPE, Carlos Gallardo, stated that although an estimate has not yet been made, part of the tax exemptions have benefited drug trafficking and illegal mining.
“For example, the behavior of fuel in Madre de Dios moves in tandem with the price of gold. Fuel consumption there is much higher than the other regions of the Amazon,” he added.
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ANOTHER DESTINATION
The resources allocated to subsidies, according to the report, could have been used to build 2,973 kilometers of natural gas (NG) transportation pipelines, or also to deploy 143,426 kilometers of NG distribution networks, which would be equivalent to seven times the existing in Lima and Callao.
“6.8 million vehicle conversions to natural gas could also have been carried out, which represents 51 times the conversions achieved by the Ahorro NGV program between 2021 and August 2024,” the document reads.
Within the report, it was proposed, among other things, to resume and strengthen the National Scrapping and Vehicle Renewal Program in order to remove the oldest and most polluting vehicles from circulation.
In addition, the elimination of the fuel tax refund was considered necessary, and the progressive replacement of the FPEC with more focused programs was proposed. The proposals also include the development of conversion policies for urban and freight transportation.
Attracting investments and facilitating their development is also among the policies that should be followed, according to the report’s recommendation.
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