Government backs down on plan to raise diesel prices, says subsidy will remain in effect

Jan 9, 2019

Following meetings with representatives of public transportation and freight shipping businesses, the government announced Monday that the subsidy for diesel fuel will remain in force. In December, President Lenin Moreno’s office announced that the subsidy would be removed and that diesel prices would be determined by the international market.

Diesel prices will continue to be subsidized.

Based on the government’s original plan, the price at pump would have risen from the subsidized price of $1.04 per gallon to $2.35 on January 18.

When Moreno signed the December decree raising diesel and other fuel prices, he said the subsidy would remain in effect only for bus companies that provide public transportation. On January 2 and 3, school bus companiesowners and freight transporters staged street protests of the price hike in Quito, Guayaquil and Cuenca.

On Tuesday, Moreno’s communication office said the government had decided to continue the diesel subsidy to “avoid widespread confusion” about the original order. “We have decided to maintain the status quo until the issue can be thoroughly studied,” a spokeswoman said. “There will be no diesel price increase for anyone, including the public at large, at this time.”

According to the finance ministry, maintaining the diesel subsidy will cost the government about $100 million in 2019.

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