The defiant attitude of the powerful transport union to avoid any increase in the price of diesel has, for now, given results. There have already been several months of negotiations with a Government that is very scrupulous in its general dealings with the unions. And despite the statements of the Minister of Finance, Ricardo Bonilla, the announced gradual increase in fuel, the most used by truck drivers, still seems diffuse. The issue is critical, and is preceded by the official urgency to finish dismantling a subsidy, unsustainable for its finances, known as the Fuel Price Stabilization Fund (Fepec).
Sources close to the negotiations assure that today they are at a stalemate. The transporters have already used the hypothetical card of a trucker strike as a barricade against the increase that could range between 5,000 and 7,000 pesos per gallon (between 1.3 and 1.8 dollars), according to independent calculations. The Government has justified the measure by arguing that it is unavoidable to continue closing the deficit left by Fepec, which last year fell from 37 to 20 billion pesos (from 9,490 million dollars to 5,130 million) thanks to the increase in the public value of gasoline and is especially leaden for the coffers of the majority state company Ecopetrol.
Minister Bonilla has also assured that in line with President Petro's environmental policies, the idea is to encourage the replacement of a fuel as polluting as diesel with renewable energy sources. Statements clearly loaded with political correctness, but which in the opinion of Julio César Vera, manager of the Xua Energy foundation, lack real support: “I do not see the Government with enough muscle to raise prices as in the case of the regular gasoline. Surely you will end up making minimum adjustments of 200 or 300 pesos maximum.”
The formula that the Government proposes and has already used for gasoline, with periodic increases, seeks to level the internal price of diesel with the international price, which is governed by market movements in the US Gulf of Mexico. Today the cost of a domestic gallon, which is used in 45% of cars in Colombia, is about 6,000 pesos (1.6 dollars) below that international indicator (with VAT included). Any increase or decrease in price is covered by the resources of the FEPEC, which imposes a range with limits as a amortization system in the event of unforeseen events, and which has ended up becoming a permanent source of consumer subsidies.
The mess centers, perhaps, on the excessive power of the transportation union in Colombia. Some calculations estimate up to 90% of the total cargo transported in the country is done by land, and 80% of the logistics chain of imported goods depends on trucks. In this way, it is not difficult to imagine why the dominant note in the Executive is one of tension regarding the effects of a strike. In any case, the energy consultant Ricardo Lloreda defends the need to find a recipe to eliminate the subsidy and give truckers a margin of time to change their vehicle fleet for one with more efficient vehicles that consume less fuel.
“The transporters' proposal, which focuses on setting the reference price in Colombian pesos according to the production cost of local crude oil, plus a profit margin, is a way to perpetuate the subsidy,” says Lloreda. The union's spokespersons have explained that Colombia is the producer of 1% of crude oil worldwide and has two large refineries that make it a self-sufficient country in obtaining diesel. Colombia produces 60% of current gasoline and imports the remaining 40%. In the case of diesel, local production reaches 92% and the remaining 8% is imported.
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For Lloreda, in any case, the truck drivers' proposal does not alleviate the financial burden that the Government has to assume in the medium and long term. “Giving an energy consumption subsidy to a certain sector is the worst business a country can do,” agrees Julio César Vera, “It is the most inefficient method of economic application because there is no effective redistribution of a public good towards sectors such as infrastructure , health or education.” He adds that it does not work as an incentive for transporters either: “In this format it will always be a sector with major shortcomings, with few plans to innovate and little generation of competition to train better and raise the level of the service they provide.”
Among those who benefit most from the diesel subsidy, in fact, are also the owners of expensive vehicles that use that type of engine. A paradox that experts contrast with the needs of a country with a delay of at least three decades in road infrastructure, lacking railways and with a mountainous and complex topography. Today the price of a gallon of diesel is around 9,200 pesos (around $2.4) and could reach 16,000 (around $4.1) if the subsidy were eliminated.
Jairo Gómez, director of the National Federation of Retail Distributors of Petroleum Derivatives, assures that “an exponential increase in the ACPM could generate an impact on the prices” of agricultural goods. And probably about inflation. But at the same time he points out that it is necessary to gradually begin to undo aid that ultimately configures an artificial scenario.
“Another issue of great importance,” adds Lloreda, “is that there are a large number of diesel vehicles in the high range, such as Toyota or Fortuner trucks, even Mercedes Benz, and it does not seem to me in any way that in the country fuel for those cars is subsidized.” In his opinion, the Government should carry out a study on how many vehicles of this type “run in the country and, if possible, seek to direct the benefits only to cargo transportation.”
For Julio César Vera, who for 12 years served as director of hydrocarbons in the Ministry of Mines and Energy, the Colombian State has a pending task in this entire history: “During three Governments in which I worked, every day we had a discussion that No president dared to face it and what is the real strength of the transporters? That is, what is actually the most beneficial for the country, where are the fundamentals to improve the efficiency and productivity of the business?
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