National Oil Refinery presents proposal to lower fuel prices

Costa Rica’s National Oil Refinery (RECOPE) on Friday announced a reduction of ₡6 for the per-liter price of gasoline and ₡9 for diesel.

After six significant increases this year, the measure – if approved – would mean the per-liter price of “Super” gasoline would change from ₡816 to ₡810 ($1.50-1.49). “Plus” gasoline would decrease from ₡788 to ₡782 ($1.45-1.44), and diesel would drop from ₡676 to ₡667 ($1.24-1.23).

RECOPE President Sara Salazar said the proposal followed a change in exchange rates and international prices of oil.

Salazar also proposed a ₡6 billion ($11 million) cut in the agency’s operating expenses this year that would be accomplished by optimizing oil downloading protocols in ships and limiting hiring, travel, scholarships and staff promotions, among other measures.

The refinery’s budget for this year would total ₡19 billion ($34 million) instead of the ₡25 billion ($46 million), as originally outlined.

However, Salazar said that RECOPE’s operating margins that currently affect fuel prices are only 8 percent, meaning “spending cuts mostly relate to efficiency issues and will not significantly help reduce fuel prices.”

During a press conference she stressed that changes in fuel prices “do not rely exclusively on the company’s expenses, but on the calculation formula that the Public Services Regulatory Authority (ARESEP) automatically applies each month.”

Salazar added: “I cannot guarantee that further reductions in operating expenses will mean better prices for consumers.”

RECOPE’s proposal responds to recent increases in fuel prices that prompted a request by President Luis Guillermo Solís to both RECOPE and ARESEP to propose solutions for lowering prices.

The last increase approved in late June by ARESEP was a ₡28 hike on average that raised per-liter prices to record highs.

ARESEP’s plan, submitted a few days later, consisted of two proposals: eliminating fuel taxes and a reducing spending at RECOPE. Solís at the time responded by saying that eliminating the fuel tax was not a valid option “considering the harsh fiscal situation the country is facing.”

The regulatory agency now will evaluate RECOPE’s proposal and will hold a public hearing before deciding to approve it or not.