Economy and Finance Minister Pedro Francke has underlined that the inclusion of liquefied petroleum gas (LPG) in the Price Stabilization Fund for Petroleum-Derived Fuels (FEPC) mostly benefits provinces and will not change fiscal sustainability.
According to the minister, there are two complementary tools to address the gas issue faced by families, which is a big concern.
"On the one hand, there is the
Energy Social Inclusion Fund (FISE) —a targeted subsidy that has increased from S/16 (about US$3.8) to S/20 (about US$4.8)— and, on the other hand, we have the Fuel Price Stabilization Fund, which already operates covering various fuels," the high-ranking official explained.
Liquefied petroleum gas (LPG) was included in the fund, was taken out, and has been included again, with new policies aimed at immediately lowering the 10kg gas cylinder price by S/11 (about US$2.6).
The idea is that when the international price becomes too high, the price stabilization fund can provide financial support to lower it; and, if the price decreases, the opposite occurs, the money disbursed is recovered in such a way that the price stabilizes and there are no fluctuations or too abrupt increases.
The greatest impact will be felt outside Lima, in provinces, because the alternative to LPG is the natural gas house connection, which has been mainly implemented in the country's capital and —to a lesser extent— in other cities.
In Lima, there are a lot of households with a connection to natural gas, which is distributed through pipes and is cheaper.
In effect, this implies a cost in the immediate future, but as this is a price stabilization fund, it will be recovered when the prices go down.
"We estimate a total cost of S/200 million (about US$48.7 million) for this year, which is fully incorporated in our budget estimates for the fiscal deficit target of 4.7% of GDP for 2021," Francke said.
In this sense, the government official indicated that the macroeconomic accounts are being taken care of.
(END) DOP/MDV/RMB/MVB
Published: 9/8/2021