Tuesday 29 November 2022

Legislator working on initiative to close RECOPE

"It affects the country's competitiveness and makes gasoline unnecessarily more expensive, says legislator Eli Feinzaig. Gasoline exceeded ¢1,000 per liter this year

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29 November 2022 - At The Banks - BCCR

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QCOSTARICA – To put an end to the abuses of the collective agreement, reduce the price of fuels and improve the country’s competitiveness, legislator for the Partido Liberal Progresista (PLP) and presidential candidate, Eli Feinzaig, is working on a bill to close the Refinadora Costarricense de Petróleo (RECOPE), the Costa Rican oil refinery that refines nothing.

One of the objectives of legislator Eli Feinzaig is to end once and for all the abuses in the RECOPE collective agreement and lower fuel costs

Feinzaig, an economist president of the PLP, in addition to being a deputy and head of faction for this party with six seats in the Legislative Assembly for the period 2022-2026, explains his initiative is to allow competition in the gasoline market, a campaign promise in the 2022 presidential elections.

Feinzaig adds that it is not just about closing  RECOPE, but that it is necessary to guarantee that Costa Ricans do not run out of fuel supply; which is a complex issue when considering the need to clearly define the roles in the market, the import mechanism, the use of the transfer infrastructure and the pipeline, as well as the installation of storage tanks, among other details.

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“We said in the (presidential) campaign that we were going to seek the closure of the (RECOPE) institution and we have that commitment unscathed. In fact, we are working on a bill (…) We consider it necessary to do this because RECOPE is an institution that affects the country’s competitiveness and increases living costs unnecessarily,” said Feinzaig.

During this year, the price of gasoline reached a record price of more than ¢1,000 per liter, due to pressure from the international market and other internal costs.

On the other hand, the scheme for setting fuel prices “has become so ridiculous (…) there is more than clear evidence that the system is not working well and therefore requires a review,” said the legislator.

At the moment, the details of the initiative are not clear, but two things are a reality, if the bill passes through the legislative hurdles, RECOPE would close and competition would open in the market.

This, in principle, would result in better prices for consumers.

“The opening would not cause a great reduction in gasoline prices, but there would be savings. There are some efficiencies that could be gained in an open market, but that is not the main objective, rather to eliminate the historical abuses that have been committed in that institution. What we do not want is that these abuses continue to be transferred to the rates, for example, some of the costs of the collective agreement,” said Feinzaig.

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Read more: RECOPE President: It makes no sense to have Recope if reforms are not made

In that sense, it is very difficult to know how much the savings per liter would be; However, Ticos (Costa Ricans) would no longer have to pay for outrageous RECOPE employee benefits, such as subsidized lunches or the funding of a financial structure dedicated to lending money for housing.

On the other hand, the closure of RECOPE would not be so easy to achieve in Congress, according to Feinzaig himself.

However, the deputy hopes to convince other legislators to support his idea.

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“Regarding the viability of the project, we consider that it is something that is built in Congress over time, first you have to have the bill, socialize it with the other factions and then we will see. It is a fight that is worth giving,” concluded the legislator.

Although RECOPE is a refiner, it has not refined a single drop of oil for more than ten years.

Whiel President Rodrigo Chaves has yet to comment on this issue, during the presidential campaign, he spoke was in favor of opening up competition in general and reducing costs.

In an interview with La Republica, published on February 6, 2022, the day of the presidential elections, Chaves said: “It is not justified that to pump gasoline we have more than 1,700 employees, and its collective agreement. RECOPE must be made to produce as God intended, with more reasonable margins for the added value that the institution gives to society, and if that happens at the end of the day by lifting the monopoly, then it will be done”.

Current price of gasoline in Costa Rica

The following is a breakdown of the current fuel prices (November 4, 2022) in Costa Rica:

Type of Fuel
Price /liter pre-tax Tax Gasoline Station Profit Margin Cost to Consumer
SUPER ¢500.63 ¢279 ¢71.11 ¢851
PLUS 91 (Regular ) ¢472.97 ¢266.75 ¢71.11 ¢811
DIESEL
¢638.58 ¢157.75 ¢71.11 ¢867
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