MercoPress. South Atlantic News Agency

Chile pumps one billion dollars to help stabilize fuel prices

Chile announced Monday a one billion US dollars injection to the fuel prices stabilization fund and another 250 million US dollars to prop the government owned fuel company ENAP in an attempt to ease the impact of ever increasing international crude prices.

"This significant injection of resources to the (fuels price stabilization) fund, when it begins to operate should help reduce the cost of petrol, diesel and kerosene on average 50 Chilean pesos (approximately 12 US cents)", announced President Michelle Bachelet. "As long as the high volatility of crude prices remain we will continue to support the exchange rate (US dollar), as we are doing currently, and stabilizing fuel prices to help the pockets of Chileans", added the president. Ms. Bachelet recalled that oil a year ago was 65 US dollars a barrel, at the beginning of 2008 it reached 100 US dollars and now is averaging 130 US dollars and the "fuel prices stabilization fund has played a critical role in helping to hold prices". "Without the fund, consumers would have to pay 700 pesos (1.55 US dollars) a liter of petrol instead of 600 pesos (1.33 US dollars)", added the Chilean president. She said last year the fund received an injection of 60 million US dollars, last January another 200 million US dollars and recently "we suspended temporarily the specific levy on fuels which helped cut another 50 pesos". Bachelet also emphasized that Chile will have to learn to live with higher energy costs and in the second half of 2008 the government will be announcing several initiatives for the conservation of energy and promotion of energy efficient cargo and passenger transport. As part of the initiative to be included in the coming budget are funds to help the transport industry renew their fleets of vehicles with more energy efficient and less contaminating units, plus the import of bio-ethanol to begin testing the possibility of introducing bio fuels to the energy matrix of Chile. Finance minister Andres Velasco said that the resources injection to the fuels price stabilization fund should come "as a relief to Chileans" given the current rate of inflation that is affecting the economy. As to the origin of the billion US dollars Velasco said they are a fiscal resource "fiscally sustainable" which should reach "all Chileans equally and fairly". However the initiative since it refers to government funds needs Congressional approval so "it will become effective once it has been voted" indicated the minister.