Friday 27 May 2022

Fuel prices will return to the amounts of March 4 to subsidize workers affected by crisis

Prices will be artificially kept to as at March 4 during the national emergency

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27 May 2022 - At The Banks - BCCR

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With 49 votes in favor and one against, legislators on Monday approved a bill that will take advantage of the reduction in fuel prices to finance subsidies for workers affected by the coronavirus crisis.

The plan will introduce an additional source of financing to nurture the “Proteger” program, which in turn is legalized with this same bill.

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The Proteger subsidy plan aims to give ¢125,000 colones per month to workers who lost their jobs or had their contracts suspended due to the crisis, as well as ¢62,500 to those who had their working hours reduced. For now, in its first stage, the plan will be financed through rearrangements of items in the Government Budget and resources from a loan from the Latin American Development Bank (CAF).

Faced with the fall in international oil prices due to the covid-19, the project will prevent local prices of super gasoline, gasoline plus and diesel from falling further.

In fact, as soon as it comes into force, the law will return fuel prices to the amounts they were on March 4, somewhat higher than today. This was confirmed by the Minister of Planning, Pilar Garrido.

At that time, super gasoline was ¢606 per liter; regular or plus, ¢583 and diesel, ¢498.

Today, prices are lower: ¢580, ¢555 and ¢464, respectively, and it is possible that the Costa Rican Oil Refinery (Recope) will request a new reduction this week in its regular monthly pricing schedule.

The new law, which goes into force once it is signed by President Carlos Alvarado and published in La Gaceta, will allow the difference between the prices of March 4 and the prices that would have to apply if adjustments according to the reduction in the cost of crude oil to be directed to the subsidy fund.

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Recope will pass the price differential to the Ministry of Finance.

The differential will cease to exist when the national emergency ends or when fuel prices exceed those of March 4.

If at the end of the emergency due to the new coronavirus there is any amount of money left over from this program, the Treasury must use it to pay public debt.

The price of a barrel of  WTI Crude has dropped to a low of US$23.63 (April 73), less than half of what it cost on February 18: US$52.02.

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The worldwide crisis of the covid-19 caused an abrupt drop since the beginning of the year. In the first days of January, a WTI barrel cost more than US$63.27.

This caused that, on March 4 and 28, two consecutive reductions in local fuel prices came into effect.

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