Government to eliminate most fuel subsidies; New ‘broad-spectrum’ testing program will guide reopening; Driving permits expire tomorrow

Apr 21, 2020 | 132 comments

The government is taking advantage of the historic collapse of oil prices to eliminate most subsidies for gasoline and diesel fuel. Energy Minister René Ortiz made the announcement Monday as oil prices briefly dropped below zero due to a lack of international storage capacity.

Gasoline and diesel subsidies will be eliminated.

“Because prices have dropped below our subsidy levels this is a good time to adopt the free market model,” Ortiz said. “The change is part of the economic reactivation plan that President Lenin Moreno introduced last week in response to the health emergency. The changes will be permanent.”

Ortiz said that, in the future, some subsidies may be reinstalled for targeted segments of the population, such as the poor and the disabled. “We understand that the current pricing situation is temporary and prices will rise in the future but we are eliminating, for good, across-the-board subsidies that have been available to the general population.”

Moreno’s October 2019 plan to eliminate gasoline and diesel subsidies sparked nationwide protests that effectively shut down the country. The indigenous organizations that sponsored the protests offered no comment to Ortiz’s announcement but the Confederation of Indigenous Nations (CONAIE) said it would review the plan before responding.

Ortiz said he did not expect a repeat of the October protests. “It appears that prices will remain below the subsidized levels for the foreseeable future so there is nothing to protest,” he said, adding that protests are illegal under the current Covid-19 health emergency.

Low fuel prices are a double-edged sword for Ecuador, Oritz acknowledged. “We are saving hundreds of millions of dollars in subsidies but, since we are an oil-producing country, we are losing even more in lost revenue.”

International oil prices rebounded from below-zero levels Monday afternoon to finish at $14. Ortiz said he expected further rebound based on June contracts and predicted prices would settle at a level between $22 and $25 in the short term.

Ortiz did not provide a date when new pricing will become effective, saying that details remain to be worked out.

Ortiz said that the subsidy for LP gas would remain in place.

Virus update

Broad-spectrum ‘quick tests’ are underway
Health Minister Juan Carlos Zevallos said that a program of “quick” Covid-19 tests is underway to establish a reliable profile of the spread of the virus in Ecuador. The new program tests a broader spectrum of the population than current testing, which is conducted primarily on those showing symptoms of the disease, he said.

Health Minister Juan Carlos Zevallos

“We know that the confirmed cases are far below the actual number and we need more information for planning purposes,” Zevallos said. Last week, President Lenin Moreno said that there are “tens-of-thousands” of unreported cases and health officials admit there are probably a 100,000 or more cases in Guayas Province alone.

“The plan is to conduct broad-spectrum testing in every canton in the country to help guide us in the reopening process,” Zevallos said. “We believe we are at the peak or approaching the peak of infections in the current wave so the new tests are essential in helping us to plan for the future.”

Zevallos has repeatedly said that the more infections in Ecuador, the better. “We know that most residents will be infected in the next year to year and a half before a vaccine is available. This builds herd immunity and leads to an overall decline of new cases. The current strategy is to delay and spread out those infections so we don’t overwhelm our hospitals. With the exception of Guayaquil, the strategy appears to be working.”

According to Zevallos, the “quick test” program is currently underway in Babahoyo, Guayaquil and Quito and will soon expand to Cuenca, Esmeraldas and Riobamba.

All driving safe conduct permits expire
Interior Minister María Paula Romo announced Monday that all safe-conduct driving permits will expire at midnight Wednesday. Many of the permits issued in the early days of the health emergency had no end date and Romo said that many of them were being abused. Safe-conduct permits are available to drivers engaged in what the government considers of “essential services” including deliveries of food and other household products. They are also available to public service employees such as police, first responders and sanitation workers as well as to doctors and food delievery workers. Applications for new permits can be made at www.ministeriodegobierno.gob.ec

Monday Covid-19 stats
Interior Minister Maria Paula Romo reported Monday that there are 10,128 confirmed cases of the Covid-19 virus in Ecuador. She said that Guayas Province cases have increased to 6,921 but appear to have peaked. Guayas cases account for 68 percent of the country’s total. In Azuay Province, the official count is 232, with 201 of those in Cuenca.

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