Colombia Diesel Subsidy Nears US$3 Billion a Year
Colombia pays about US$3 billion a year to keep diesel cheap. The government now plans world prices for private, official and diplomatic vehicles. The post Colombia Diesel Subsidy Nears US$3 Billion a Year appeared first on The Rio Times .
Colombia is spending nearly US$3 billion annually to maintain affordable diesel prices. The subsidy, now estimated at COP 9.5 trillion (around US$2.96 billion) per year, is set to end for private, official, and diplomatic vehicles. Public freight and public transport will continue receiving the subsidy. The gap between the subsidized price and the international reference price is about COP 8,500 (US$2.65) per gallon.
The Fuel Price Stabilisation Fund, responsible for covering the subsidy, is funded by Ecopetrol, Colombia's state oil company. Ecopetrol's dividends dropped significantly due to the subsidy costs. The government plans to review the pricing policy for private vehicles and has sought input from the competition regulator. The subsidy affects about 1.21 million diesel vehicles in Colombia, with 443,870 being heavy goods vehicles.
The policy aims to avoid higher food prices, but critics argue it is a flawed pricing policy rather than the fund itself.
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