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Energy

Oil price plunge gives Ecuador opening to lift fuel subsidies -minister

QUITO, April 20 (Reuters) - The plunge in global crude prices gives Ecuador an opportunity to once again try to lift costly fuel subsidies, though the government would maintain some support for sectors of the population who need it, Energy Minister Rene Ortiz said on Monday.

President Lenin Moreno in October walked back a plan to eliminate most gasoline and diesel subsidies in the face of violent protests against the measure led by indigenous groups, which paralyzed the Andean country for nearly two weeks.

But the worldwide plunge in oil prices - due to evaporating demand during the coronavirus pandemic and a price war between top producers - means consumers would not be hurt by a lifting of the subsidies since fuel prices set by the free market would be just as cheap, Ortiz said.

“Now it’s just a question of making the decision,” Ortiz told a local television channel.

His comments come as cash-strapped Ecuador’s public finances, which are dependent on crude exports, come under pressure from the price plunge as well as government efforts to combat the country’s coronavirus outbreak, one of the worst in Latin America.

Ortiz said if prices were to rise above set levels, compensation for poorer Ecuadoreans would kick in.

But the country’s largest grouping of indigenous nations, CONAIE, has rejected such a targeted approach to the fuel subsidies, arguing the government should instead get finances under control by suspending payments on foreign debt.

Ecuador reached a deal with bondholders last week to delay interest payments on several of its bonds through August to free up some $811 million to fight the virus. The country is seeking additional financing from multilateral lenders and China (Reporting by Alexandra Valencia, Writing by Luc Cohen; Editing by Bill Berkrot)

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