Fuel prices could rise for middle- and higher-income Ecuadorians under plan being negotiated

Jul 19, 2022 | 17 comments

Although prices for gasoline and diesel fuel could be reduced for poorer Ecuadorians, they are likely to rise for others. On Monday, indigenous organizations released their proposal for a three-pronged approach to provide price relief to the poor and to the agricultural and transportation sectors.

Under a plan presented by indigenous groups, public transportation, including buses and taxis, would be eligible for reduced gasoline and diesel prices.

The proposal was presented on the fourth day of negotiations between the government and indigenous groups that supported the 18-day anti-government protests in June.

Although the government did not officially respond, a member of the negotiation team from the Transportation Ministry said the proposal “was positive and headed in the right direction.”

What was not defined in the proposal were the prices that middle- and higher-income Ecuadorians would pay under the targeted subsidy plan, although the government suggested earlier that those would be determined by regional and international markets.

The indigenous negotiation team, led by the Confederation of Indigenous Nationalities (Conaie), proposes that subsidized fuel would be available to low income families and individuals, to most of the public transportation and freight transport sectors, and to the agricultural sector except for large corporate operators. They are also proposing that the price for subsidized gasoline be reduced from the current $2.40 a gallon to $2.10 and that diesel be reduced from $1.75 to $1.50.

The plan offers details on each point, requiring that the subsidy for freight transport involve the delivery of food and other essential household goods as well as equipment needed for small businesses, including farms. The agricultural fuel subsidies would be applied to land preparation, cultivation, harvesting and transporting food to markets.

It was not clear Monday if the government will add the LP gas subsidy to the negotiations. At current prices, gas is subsidized at almost 80 percent of the market price, costing the treasury more than $1.2 billion a year.




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