MercoPress. South Atlantic News Agency

Uruguayans need to “get used” to price of petrol fluctuating, Energy Deputy Minister says

The URSEA report was finished before a fall in the international price of oil, so the trend for now is upwards

Uruguay's Deputy Minister of Industry, Energy and Mining, Walter Verri hinted a new hike in the price of petrol was coming up in August and warned people will need to get used to such a mercurial behavior

As per the Urgent Consideration Law (LUC), the Executive Branch is to adjust the price of fuels at the end of the month, taking into account the Import Parity Price report (PPI) drafted by the Regulatory Unit for Energy and Water Services (URSEA) and a report from the state-run ANCAP oil company.

The report published Monday, excludes the collapse and the subsequent rise that the international price of oil days ago, since it stretches between June 16 and July 15.

Verri said in a radio interview that the drop in the price of crude oil occurred last week and that “until July 15 the trend was upward”, and that in light of this “it is likely” that fuels will rise as of August.

He added that “it will be difficult to understand the system”, and that “every month we are going to have to get used to raising or lowering the [price of] fuel.”

Vierri also explained that “there was a downward trend that I hope will continue to demonstrate with facts how it works,” he added in reference to the PPI.

He also said the government was working on eliminating the universal subsidy for supergas (cooking gas), although in the immediate term ”the increase (of supergas) will take place, but the subsidy will be maintained.”

The Regulatory Unit for Energy and Water Services (URSEA) has also advised the Government to increase the price of petrol as of August in accordance with PPI for the period June 16 - July 15, whereby premium gasoline should increase 2.8%, super naphtha would rise 2.6%, diesel 3% and supergas 6.8%.

In June there was a 12% increase in the price of fuels, and in July the increase was 0.5% in gasoline and 0.9% in diesel. Since the beginning of June, the regulation of part of the fuel chain (distribution and gas stations) has been under the jurisdiction of URSEA.

Last Monday, the price of oil registered its lowest value in a month, trading at US $ 68.62 a barrel.

Last Saturday Office of Planning and Budget (OPP) Director Isaac Alfie addressed a project to cut down subsidies to supergas for the general population, to focus on families with fewer resources. He added the price would go up for most Uruguayans, except “only” for lower-income families.

Gasoline retailers have pointed out that under the new scheme, of diesel would be equal to that in other Mercosur countries, while the current prices in Uruguay are among the highest in the continent, certainly above Argentina, Chile or Paraguay.

Removing the mixture with biodiesel (5%) which today is mandatory under Law 18,195 on biofuels, whose purpose is the “promotion and regulation of the production, commercialization and use of biofuels”, coupled with another 9% deduction, the price of diesel would by similar to that in the rest of Mercosur.

A bill submitted by Economy Minister Azucena Arbeleche to the national Parliament would provide for the elimination of the mandatory biodiesel mixture, although it does not mention another source of financing to make up for the current 9% tax that needs striking.