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Officials Eliminate Diesel Fuel Subsidy

January 5, 2007

In a controversial move, the Public Services Regulatory Authority (ARESEP) has eliminated a subsidy for diesel fuel in place since the 1970s. This will raise the cost of one liter of diesel ¢17 ($0.03) as soon as the decision, announced Dec. 21, is published by the official government daily La Gaceta, likely early this month, according to ARESEP spokeswoman Ana Carolina Mora.

The price of one liter of diesel is expected to increase from ¢347 ($0.67) to ¢364 ($0.71). At the same time, the cost of one liter of super gasoline will drop from ¢516 ($1) to ¢488 ($0.95) per liter and regular gas will drop from ¢486 ($0.94) to ¢460 ($0.89) per liter, according to ARESEP.

Diesel and airplane fuel have been subsidized for 30 years because part of their cost has been covered by the sale of gasoline.

Income from the sale of diesel fuel makes up 40% of the National Oil Refinery’s (RECOPE) total income, according to the daily La Nación.

Maritza Hernández, president of the National Chamber of Transport Workers, told La Nación the diesel hike is a “terrible” decision that will force diesel-guzzling bus companies to pass the price increase on to consumers.

The diesel hike could also make Costa Rica less competitive in terms of production, since this fuel is used to make exported products, Rafael Carrillo, president of the Union of Private-Sector Chambers and Associations (UCCAEP) told the daily.

In other news, ARESEP also approved an increase in taxi fares to go into effect as soon as it is published in La Gaceta. The price of the first kilometer of a taxi ride will increase from ¢330 ($0.64) to ¢365 ($0.71), while each additional kilometer will increase from ¢300 ($0.58) to ¢340 ($0.66).

 

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