MercoPress. South Atlantic News Agency

Argentina ends “fuel subsidy” to foreign cars

Foreign vehicles loading fuel in Argentine gas stations along the border will have to pay the same prices as in their own countries, which is basically double the cost of gasoline and diesel in Argentina.

"The idea is that fuel prices in border areas are equivalent to those of the nearest neighboring country", reports Clarin quoting sources from the Planning Ministry which announced the decree will be signed any moment.

The system is to be applied in all areas Argentina's Frontier regime considers border areas "with the exception of Patagonia which already works under the frontier areas system. The Energy Secretary has the final word and will decide how to enforce it".

The system is mandatory for all pump stations in frontier areas which sell fuel to foreign vehicles.

"A car with a foreign plate will not be entitled to load fuel near the border in the same pump as Argentine cars. The gas station can opt not to have a differential pump, but in that case he is banned from selling them gasoline or diesel", added the Planning Ministry sources.

Currently top grade gasoline in Paraguay costs 95 US cents a liter; in Uruguay 1.35 US dollars; Brazil 1.15 and Chile 1.17. In Argentina the average is 61 US cents per litre which means foreigners in frontier areas will have to pay an additional, almost doubling the price.

"It's disproportionate that 2% of Argentina's total fuel sales occur in frontier areas; that is the reason for the diesel shortages we've been experiencing", said Argentine sources. "We're not going to subsidize foreigners' fuel tanks".

However there's at least one catch: what happens in the triple border, which is the reference price, Brazil or Paraguay?

Furthermore the province of Mendoza which receives a significant influx of Chilean tourists has appealed to Buenos Aires proposing the ban does not apply to foreign common vehicles and tourist buses.

Although only ten out of 300 pump stations in Mendoza will be forced to sell fuel at Chilean prices, the Tourism Office insisted that "there's no diesel speculative organized purchasing in our province".

Buenos Aires political analysts also point out to the fact that the Argentine trucking industry, with the current price structure in Mercosur, has a very comfortable competitive edge over the other international fleets. Coincidently the powerful Argentine truckers union achieved a sweeping 19% salary increase which ensured the union boss his leadership. The fellow happens to be a close political ally of President Kirchner