Venezuela Rolls Out Two-tiered Fuel Pricing

(Argus, 1.Jun.2020) — A two-tiered gasoline pricing system rolled out by Venezuela today maintains generous subsidies for limited volumes but allows private-sector operators to charge international prices for imports.

The new fuel rationing and pricing policy was unveiled over the weekend in separate addresses by President Nicolas Maduro and acting oil minister Tareck El Aissami, following the arrival of gasoline and alkylate cargoes from Iran.

The new system, which was generating widespread confusion at stations early this morning, is designed to tackle a chronic fuel shortage by restricting scarce supply. At the same time, it is meant to provide economic incentives for Venezuelan offshore operators close to the government to import and distribute fuel, a role traditionally reserved for the country’s US-sanctioned national oil company PdV.

Up to 1,368 service stations nationwide were ordered to reopen at 6am local time (6am ET) today to supply 91-octane gasoline priced at Bs.5,000 per liter ($0.025/l), with payment in Venezuela’s battered local currency. The subsidized fuel will be rationed at 120 liters per month for cars and trucks, and 60 l/mo for motorcycles.

Only vehicle owners holding a government-issued homeland identity card are allowed to purchase the subsidized gasoline. Those without the cards can tank up at $0.5/l for 95-octane gasoline sold at 200 specially designated stations controlled by private-sector operators authorized to carry out imports. Payment at these stations will only be accepted in US dollars or the government’s opaque “petro” electronic currency.

The government said it will be adjust the prices at these stations as often as deemed necessary, without specifying any underlying calculation or international indicators.

The operators of the special stations were not identified, but they are widely believed to include the same Venezuelan offshore brokers that have been supplying fuel cargoes to the Opec country in recent months. Terminal services will be provided to the importers by the new PdV Ports subsidiary that was created last month.

Vehicle congestion at stations, a common sight for months, is supposed to be addressed by allotting purchases based on license plate numbers: plates ending in 1 or 2 can only buy gasoline on Mondays, 3-4 on Tuesdays, 5-6 on Wednesdays, 7-8 on Thursdays and 9-0 on Fridays.

Rise up or tank up

Critics say the new system is illegal under Venezuelan law, and will sow further corruption. The political opposition led by Juan Guaido called for Venezuelans to rise up against the rules.

PdV is hoping the rationing scheme buys more time to repair part of its 1.3mn b/d refining system so that it can replenish the market without resorting to imports.

The Clavel, the last of five Iranian tankers, has now entered Venezuelan waters. Iran’s foreign ministry indicated that would supply more fuel to Venezuela if the country requested it.

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