fuel prices of higher consumption, such as gasoline and diesel, increased $ 3 from this Tuesday by decision of the Executive Power. In the case of supergas, after three months with differential adjustments for packaged and bulk product, the government changed the criteria.
While this month the supergas rate packing rose 5.34% and went from $56.16 to $59.16 per kilo, the bulk supergas tariff it had a correction of 3.8% and also rose $3. Thus, the value to the public went from $78.53 to $81.53 per kilo.
What had happened in the previous months? For 8 months he remained frozen the rate of bottled supergas used by families, but it had been strongly corrected that of bulk supergas. That energy that last June was traded at $58.53 had three consecutive corrections between October and November, accumulated an increase of $20 and went on to be worth $78.53 last December (+34%). Today the accumulated increase since June is 39%.
This bulk modality represents 20% of the demand for LPG in Uruguay, and is used in different areas, from hotels, restaurants and hospitals, to the grain and poultry industries, among other large clients.
Currently, the Import Parity Price (PPI) of supergas set by the Regulatory Unit for Energy and Water Services (Ursea) is $53.7 per kg (at plant without taxes), according to the latest report. Ancap’s net income for bulk product in January was $39.97, and $12.27 for packaged product.
A millionaire subsidy
The sale price of this product at the La Teja refinery is lower than the production and import costs. This subsidy, which reaches all social sectors and all uses, is financed through surcharges on other products that Ancap markets. The X Factor (which includes Ancap’s cost overruns, subsidies, and inefficiencies) was defined by the Executive Power at $2.97 with the photo at the end of 2020. Within that rate —which Uruguayan consumers pay above the theoretical import price— , the supergas subsidy is the one that took the most: $ 1.70 (57%). However, according to a projection made by Ancap based on real prices for 2021 and consumption, andthe supergas subsidy rose to $2.62 in 2021 and will increment to $ 2.93 for this year. This tariff policy implies a subsidy of some US$125 million per year, which Ancap transfers on the gasoline and diesel tariffs.
In a hypothetical scenario presented by the entity when it presented its balance sheet at the end of the third quarter of 2019, the possibility of eliminate the entire subsidy for the 30% of the population with the highest income and 100% of the bulk subsidyl, something that still would leave a subsidy of US$ 77 million. That would imply leaving a factor x (surcharge) of $1.82 that consumers of diesel and gasoline should continue to pay with each liter they load at a pump.
This is an issue that has been under scrutiny for a long time and seems difficult to resolve. The government is studying the possibility of modifying the general subsidy and focusing it on low-income families.
Previously, the change in bulk supergas in previous months can be read as a sign in that direction. But What can happen to the LPG that families use for cooking and heating, which is the most in demand? During a recent interview with The Observerthe Undersecretary of Industry, Walter Verri pointed out that “it is difficult to think that it can be removed”.
“I am not one of those who believes that it is possible to do this, beyond the fact that it is a heavy burden on the price of fuel, and it is part of the x factor that we intend to see disappear in the not too long term. (…) It is not an easy issue to resolve. Surely we will have to solve first the circuit of the gas supply chain to the micro-bottles, because if that is ultimately where the subsidy should be centralized, today that is impossible”.
“Even with the subsidy, today micro-bottles have a higher price than supergas because there is a chain of refills for these bottles that is totally irregular, if you will. What I do not foresee, honestly, is that there are going to be significant changes in the subsidy. I don’t see the way. Perhaps we have to think that it should not impact the price of fuel and that it could be a subsidy that can come from the State. It is part of the discussion that we have to give to the internal government”, he had said.
