As fuel prices rise again, Lasso meets with public transporters about providing targeted subsidies

Aug 13, 2021 | 1 comment

President Guillermo Lasso met Thursday with representatives of urban and long-distance bus owners, taxi owners and trucking companies to find a solution to rising fuel costs. The president insisted that he supports the end of general subsidies for gasoline and diesel fuel but says he also supports targeted subsidies for businesses that provide public transportation and transport agricultural products.

Protesting higher diesel prices, buses, trucks and taxis stopped public service and lined city streets earlier this year in Cuenca. (El Mercurio)

The meeting came on the day when fuel prices rose again, diesel to $1.60 a gallon from $1.56 and regular gasoline to $2.28 from $2.18. Under a program established by former president Lenin Moreno, prices will will rise as much as five percent a month until they reach international market levels.

Lasso said that the application of the targeted subsidies will take about two months although transporters are asking for a one-month schedule. “Our owners are in dire circumstances and need relief immediately,” says Miguel Guamán, who represents owners of urban buses. “Our intent is to work with the president to find solutions as quickly as possible.”

Guamán adds that a quick resolution is also important for heading off public protests. “If people are assured that bus fares will not rise and the price of food shipments will be the same, they will be less likely to join the strikes being proposed by some leaders. Our interest is in keeping the peace.”

At the beginning of the meeting, Lasso cautioned that the government cannot fix all the problems facing transporters. “I keep hearing that the high cost of fuel is crippling the industry but fuel is only five or six percent of the total cost of the transport business,” he says. “We can help in this area but the fact remains that the number of passengers transported, and the amount of goods transported is down substantially due to the pandemic and other economic factors. We must be honest as we appraise the situation and look at the support the government can provide.”

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In a morning radio interview, Lasso said that transporters must make changes to “modernize” their service to attract additional business. “We must get past the idea all the problems are the result of ending the subsidies. Business must adopt new strategies and best practices to sustain growth.”

Among the main issues at Thursday’s meeting was how the subsidy would be applied, with most transporters wanting to receive a discount at gasoline and fueling stations while suppliers are pushing for a reimbursement system. Jorge Calderón, president of the National Federation of Taxi Owners, said his members will not support reimbursement after paying full price at the pump. “The Moreno government promised this after the 2019 strike but lied to us and did not follow through. We will not be fooled by this again.”

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