MercoPress. South Atlantic News Agency

Uruguayan gov't announces new increase in price of fuel

The adjustment was below Ursea's recommendations, Lacalle explained

Uruguayan authorities Wednesday announced the price of fuel at pumps will go up as of Friday, April 1. President Luis Lacalle Pou confirmed that gasoline will go up UR$ 3 (US$ 0.07), from UR$ 74.88 (US$ 1.81) to UR$ 77.88 (US$ 1.88) and UR$ 5 (US$ 0.12) for diesel, from UR$ 53.99 (US$ 1.3) to UR$ 58.99 (US$ 1.49).

Lacalle also explained the adjustments were below those recommended by Ursea (Energy and Water Services Regulatory Unit), which had suggested an UR$ 15 increase for diesel and around UR$ 8 for gasoline, but the state-run oil company ANCAP opted to cushion the impact on consumers.

“Again with an effort, in order not to be paying an overprice, we are going to give an increase of $ 5 in diesel oil and $ 3 in gasoline,” Lacalle said. “Today we are at an attractive price with respect to Brazil, in fact Brazilians are coming,” he added.

In March fuel went up 2%. April's rise is the third consecutive increase in fuel prices this year.

Prior to the announcement, Industry Minister of Industry Omar Paganini had said Tuesday that the government was “studying every month” the price of fuel given the worldwide crisis stemming from the conflict between Russia and Ukraine.

Paganini also pointed out Ancap had “very little financial backing” left to buffer a new increase.

The procedure whereby Uruguay adjusts the price of fuel has been set forth in the Law of Urgent Consideration (LUC), enacted in July 2020, and ratified last weekend in a referendum.

The Uruguayan Government also decided to stop applying the Value Added Tax (VAT) to “baked goods, noodles and similar products,” for 30 days “with the possibility of extending it,” according to Lacalle.

Authorities have been particularly concerned over the increase in the prices of some products, such as meat or eggs as a consequence of Russia's invasion of Ukraine, which caused prices to soar globally, in addition to high temperatures recorded in Uruguay during the summer, which caused the death of thousands of hens and one of the biggest droughts in recent years.

After winning the LUC referendum Sunday, Lacalle had announced some mesures were coming up to bring some relief to the pockets of Uruguayans.

Former Army Chief and current Senator Guido Manini Ríos of Cabildo Abierto, a political formation within the ruling Multicolor Front, brought a proposal to Lacalle whereby “for an undetermined period of time” merchants should have no profit margin on “some twenty” products of the basic food basket, in exchange for what the State would grant a tax waiver to make up for those losses. Manini believes the measure should be in force at least through the Winter.

Eggs and some meat cuts have already been removed from the VAT scheme on a temporary basis.