The government’s plan to wean consumers from subsidized LP gas appears to be faltering.
When President Rafael Correa announced last year that gas subsidies would end, he said the government estimated that 3.5 million households would change to electric cooktops by early 2016. The government spends about $600 million a year on the subsidy.
As an incentive to change, the government announced it would
offer financing on the purchase of new cooktops to replace gas cookers and would provide a limited reduction in electric costs.
Since then, however, the government has twice pushed back
the date to end the gas subsidy, which is now set for early 2017. In addition, the financing incentive for electric cooktops has been used by less than 20% of those expected to take up the government’s offer.
Another problem is that Ecuadorian companies expected to manufacture the new electric cooktops are months behind schedule. Ecuador’ Ministry of Electricity says that only two of the 10 companies expected to be in production by last month are producing cooktops.
At least one political analyst says a new problem is emerging: politics. University of San Francisco political science professor Carlos Ruiz says the delays are pushing the end of gas subsidies close to the next round of national elections. “This could be bad for Alianza Pais and President Correa if it comes close to the election,” he says. “A political opponent could make an issue of it in the election and I think it would play well with many voters.”
Cuenca electrician Jaime Ramoz says requests for installation of 220v electric service, necessary for use of electric cooktops, have picked up but not by the amount the government predicted. “The electric company says that 100 new 220v meters are being installed every day but about half of these have nothing to do with the government’s plan. Some homeowners were already changing to 220v to run other appliances,” he says.
Cuenca utility company Centrosur has set a goal of changing 80,000 meters a year in preparation of the change-over but so far the number is running about 70% below that. Centrosur says it needs to
change 320,000 meters by mid-2016 to meet government expectations.
The low numbers in Cuenca mirror those in other areas of the country.
“The number of conversions will be well below what the government predicts,” says Ramoz. He says that even homeowners who do not mind switching to electric cooking are holding back because of confusion about the plan. “They keep changing the rules so no one is sure what will happen. No one even knows if electricity will even be cheaper than subsidized gas. Everyone is waiting to see what happens.”
On the other hand, says Ramoz, many people prefer to cook with gas. “They will stay with gas even it costs more. It’s familiar to them and they already have the equipment.”
Photo caption, Electric cooktops being manufactured in Cuenca.