Friday 3 February 2023

Recope refuses to propose an adjustment amount for fuels

Contrary to the current methodology, RECOPE will only send data to Aresep this Friday so that it can calculate

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3 February 2023 - At The Banks - BCCR

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QCOSTARICA – As is custom every second Friday of each month, based on the current methodology, the Refinadora Costarricense de Petróleo (RECOPE) – the Costa Rican refinery that refines nothing – submits to the regulatory authority an adjustment in the price of fuels.

RECOPE is the State entity in charge of importing and distributing fuels in the country

The adjustment this year has been consecutive increases since January, bringing the price of a liter of gasoline to almost ¢1,000 colones.

For this Friday, however, the RECOPE reported that from now on it will not propose a specific amount of adjustment for fuel prices to the Autoridad Reguladora de los Servicios Públicos (Aresep).

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Instead, according to Juan Manuel Quesada, executive president of the RECOPE, they will only send technical and statistical information to the Aresep so that this entity determines the new rates for gasoline and other fuels.

“This week, RECOPE will not request an increase in fuel rates, the law establishes that Aresep is the competent entity to set fuel rates. We are respectful of what the law establishes in this regard,” said Quesada in a brief video by the institution’s press office on Thursday afternoon.

Normally, the Aresep approves or rejects the proposals made by public service providers, based on the information. The Authority, however, may make ex officio adjustments.

Why the change? Why will Recope stop submitting requests for increases or reductions as it has done historically?

Quesada, who was named head of the RECOPE by the new government of Rodrigo Chaves, rejected that his decision is to evade the institution’s responsibility for possible increases in fuel rates, especially due to the strong increases in recent months.

“There is a reality and that is that we are under a new administration of this government and there is also a change in the Executive Presidency of RECOPPE and well… I am going to be governed by the principle of legality (…) We are not in a populist game, we are recognizing the powers the Aresep has by law”, insisted the new RECOPE chief.

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The last adjustment, corresponding to the month of April, came into force on May 5, with increases of ¢42, ¢38 and ¢59 for a liter of super gasoline, regular gasoline and diesel, respectively.

With these increases, the liter of super gasoline was ¢951; the regular one at ¢927 and the diesel at ¢904.

One more hike

On Wednesday, the price of gasoline in Costa Rica reached a new historical price, with an update of the Single Tax on Fuels (Impuesto Único a los Combustibles)  signed by the former president, Carlos Alvarado, and published this Wednesday in La Gaceta, raising prices ¢6 colones a liter on gasoline and ¢3 on diesel fuel.

In this way, a liter of super gasoline went to ¢957, regular to ¢933 and diesel to ¢907.

¢1,000 a liter?

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Despite if RECOPE making the request or the refinery leaving it to the regulator, a sure bet if that there we can expect an increase, the sixth consecutive for the year, a price for a liter of gasoline could reach ¢1,000. Or more.

The price of fuels triggered the cost of living to its highest level in the last ten years, placing year-on-year inflation at 7.15%. In addition, more than 10% of Costa Rica’s imports in the first quarter of the year corresponded to fuels.

The increases and high prices are being blamed on the Russia – Ukraine war and the dollar exchange rate.

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