Distributors warn that the gas that Colombians use in their homes could rise in price

Recently, the price of Liquefied Petroleum Gas (LPG) or propane gas used in many Colombian households has increased considerably and, according to the Colombian Propane Gas Association (Gasnova), this phenomenon will continue if the national government does not expand the subsidy given for this product in several departments of the country.

What Gasnova pointed out is that it is necessary to extend the discount that is being granted through Ecopetrol, which runs until June of this year, since if the increase is not granted it will be greater than 47% in the second half of 2022.

Alejandro Martínez Villegas, president of the Association, warned that the impact of the increase in prices at the international level already had an impact that worries the sector, since LPG consumption decreased by 8.6% between August 2021 and February 2022, meaning that this year it could rise from 9% if the subsidy is not maintained.

The price increase puts the sector on alert, as it has doubled. The entity explained that between January and December 2021 the value that distributors paid for propane gas rose from $1,041 per kg to $2,456, which means that it increased 2.4 times. It should be emphasized that this is a figure averaged among all sources of supply LP Gas (LPG) that they sell to distributors.

This is why the president of Gasnova stressed that “of the huge numbers of subsidies allocated to other fuels, a sum could well be allocated to expand the coverage of subsidies to LPG consumers throughout the country.” Likewise, the entity explained that currently the subsidy is not 40% or 50% as established by the norm; it noted that, for example, “for the department of Nariño the current subsidy is equivalent to 22% and 18% of the sales price for strata 1 and 2, respectively.”

Martínez Villegas emphasized that, during this year, thanks to the subsidy given to distributors through Ecopetrol, it was possible to increase from $2,360/Kg. (price in December 2021) to $1.621/Kg., which is what is currently paid and which would be lost from next June. And they recalled that in 2020 the average sales price of Ecopetrol's LPG was $653/Kg.

In addition, the concern is also that, if this benefit reduces LPG consumption during the first four months of the year, the impact will be worse when the benefit is no longer granted. The price increase can be explained by the increase in demand by Asian countries for the petrochemical industry, such as the production of plastics in China and the replacement of firewood in India.

For its part, Ecopetrol has reported that during the first quarter of 2022, thanks to the subsidy for the sale of LPG, the market has seen a relief of approximately $87 billion and that by June 30, until the profit goes, the accumulated profit may be up to $200 billion.

“Ecopetrol, aware of the social nature of LPG in the country, adopted this temporary measure with the purpose of generating relief to the end user, especially to strata 1, 2, 3 and rural areas,” the company said at the end of December 2021 when they announced the reduction in the price of Liquefied Petroleum Gas (LPG) supplied by the company by 30% from January 1 to June 30, 2022.

KEEP READING: