Ministry of Energy and Mines incorporates fuels into the Price Stabilization Fund

The Ministry of Energy and Mines (Minem) reported that it had recently implemented some measures to address the increase in international prices of oil and oil products . It was therefore decided to include some of them in the Petroleum Fuel Price Stabilization Fund ( FEPC).

It was decided to include in this list fuels, which are widely used among the lowest income segments of the population. This was made official by Supreme Decree No. 002-2022-EM, published this Monday, March 28 in an extraordinary edition of the Bulletin of Legal Standards of the Official Gazette El Peruano.

It is specified that fuels will be incorporated into the fund for a period of 3 months. These are 84- and 90-octane gasohol and 84-octane gasohol.

The regulations also indicate that the diesel price band at FEPC is stabilized until the end of April. Diesel 2 and Liquefied Petroleum Gas (LPG) are temporarily incorporated in bulk in the Stabilization Fund. The latter is a widely used fuel among taxi drivers and other carriers, so it is expected that the price will stop increasing.

The Supreme Decree comes into force as of March 29, 2022.

MODIFICATIONS IN THE OPERATION OF LPG

The decree also modifies the operation of LPG in the Fuel Price Stabilization Fund. This means that the increase will not be 10%, but will be gradual, and at a level of 3.5%.

In addition, LPG will use as a reference the Export Parity Price instead of the Import Parity Price, which will allow its cost to be reduced. This is because most of the sale of this fuel corresponds to domestic production.

It should be noted that the FEPC was created in 2004 to prevent the high volatility of international oil prices from greatly influencing the prices of Peruvian consumers. Create a price band that limits its variation with a maximum price and a minimum price. Thus, this fund has prevented the price of that fuel from rising in the local market by 3 soles per gallon.

OTHER PRODUCTS ON THE RISE: SUGAR

In addition to the price of fuels and gasoline, the increase in sugar is also worrying Peruvians, as it is an input used in the daily lives of many families. The input has risen in price by 38% so far this year, what is the reason?

According to Eduardo Zegarra, former chief of staff of advisors at Midagri, fertilizers account for almost 20% of the cost of sugarcane production, he explained to RPP Noticias.

“And if we consider that the price of fertilizers has risen by almost 300% due to the impact of the Russian invasion of Ukraine, then it is possible that they are transferring this increase to the consumer,” he said.

According to the specialist, this scenario is added to the lowest cane production nationwide. A fall has been reported in the import of the input, mainly from Colombia.

On the other hand, according to the Agrodata.pe portal, last year 0.23% less was imported than in 2020. This was due to lower production on the international market as a result of climate problems in China and the change in sugar crops in several countries.