The Union of Nafta Sellers asked the Government to delay the adjustment until stock is restored
Many Uruguayan service stations were unable to supply the demand of recent days
The Union of Nafta Sellers of Uruguay (Unvenu) asked the Uruguayan Executive Power that, in case of resolving an increase in gasoline rates, it be postponed for a few days in order to be able to rebuild the stock lost due to the demand of citizens when they find out of the possible increase in fuel prices. From the union they declared that it was not possible to satisfy the demand of gasoline buyers during the weekend and it will not be possible this Monday either.
Every end of the month since the middle of last year, the authorities receive information from the Regulatory Unit for Energy and Water Services (Ursea), which carries out an analysis regarding fuel rates and sets a reference according to the Parity Price of Import (PPI).
These reports indicate the price at which the marketing of refined fuel should be corrected in relation to international costs and, based on this and other indicators such as Ancap’s financial situation, the Executive Power decides to make the decisions corresponding to the prices of local marketing.
In the report for the month of May, released last Friday, a new upward correction is shown for gasoline rates in Uruguay. As indicated, Super gasoline has a gap of $6.41 (US$0.16) per liter below the international reference price and in the case of diesel the difference is $10.75 (US$0.27).
Faced with this situation and as usually happens when a possible increase in prices is discussed, the demand of the citizens grew and different service stations could not meet the customers. According to a statement from the Union of Nafta Vendors of Uruguay (Unvenu), “Ancap did not manage to meet the demand of the stations” during the weekend -days in which the distribution plants are usually closed- and it is expected that for this Monday orders are “cut back,” the statement says. Ancap, on the other hand, expressed that the supply during the weekend “was normal”.
In a scenario in which everything indicates that the price of fuels, Unvenu requested in a statement that the “possible” increase in prices be postponed until the stock is restored, to avoid further financial problems at service stations.
< p class=”paragraph”>In addition, the document made reference to the strike of officials scheduled for Tuesday the 31st, a measure that implies a cut in fuel supply for that day, and considered it as “a practice that coincidentally is becoming habitual in Ancap prior to an increase in price of fuel”.
After four consecutive months of increases in fuel prices below what is recommended by the Ursea, the President of the Republic Luis Lacalle Pou declared in a conference press that “(Ancap’s) back is over” and not increasing prices would be “giving up keeping accounts balanced”, which could result in having to “capitalize the company”. “We are far from that, but we must be very cautious,” added the president. The last increase was announced at the end of April and implied a rise of $1.5 (US$0.04) in Super gasoline and $3 (US$0.08) in diesel.
“Obviously, this Ursea report is not saying that it conditions, but it gives a preview of how the world oil situation is,” said Lacalle. On Tuesday of this week the Executive will meet to take action regarding a situation in which the international market suffers large increases in oil and its derivatives, caused by the conflict between Russia and Ukraine.
In addition, there is another important factor and it is the rise in the dollar: the prices of the products that Uruguay exports are increasing and that generates a greater appreciation in the local currency. In addition to that, the Central Bank has been raising peso rates, something that motivates investors to “position themselves in instruments in pesos instead of in instruments in dollars, more so in a world of very low rates,” said economic analyst Mathías Consolandich a In Perspective (Radiomundo). “This difference in rates induces changes in portfolios in favor of the peso and against the dollar, which also puts downward pressure on the value of the exchange rate,” he added.
During the political campaign prior to the 2019 Uruguayan presidential elections, Luis Lacalle Pou promised that he would not increase tariffs, taxes and fuel, relying on austerity as the central axis of his government program. However, more than two years after taking office, the promise was not fulfilled.
Regarding this, the director of Ancap, Richard Charamelo, told Doble Click (Del Sol) on Monday morning that the government tried to avoid the increases, “as long as the body’s back could absorb them.”: “Let’s not forget that when we entered (a barrel of oil) it was at US$40 and now it is above US$110″.
In that same line, he declared that “the safe is almost empty”. “When we joined, Ancap was putting around US$35 million per year to subsidize gas and this year we put aside US$120 million,” added Charamelo.
The price of diesel is $61.99 (US$1.55) per liter and, depending on the variables used to calculate the adjustments, the increase should be 17.3%. In the case of Super gasoline, the correction would be 8.1% to $85.79 (US$2.15) corresponding to the current price.
Furthermore, Charamelo announced that Operating hours at the La Tablada plant will be extended from the end of June, as a measure to meet high demand. Meanwhile, the officials who will work during the new shift will be trained.