Chile's Finance Minister Jorge Quiroz stated the government is reviewing changes to the Fuel Price Stabilization Mechanism (Mepco) due to high fiscal costs from oil price rises tied to the Middle East conflict. He previewed a bill to fund the Petroleum Price Stabilization Fund (Fepp) and prevent paraffin price hikes. Opposition lawmakers criticized it as passing war-related costs to families.
On Sunday, Finance Minister Jorge Quiroz explained on Mesa Central the high fiscal cost of the Mepco in softening fuel price pass-throughs to consumers. On Monday, after meeting government and opposition lawmakers, he previewed reviews of alternatives to replace the mechanism, given Chile's fiscal situation and the third-week Middle East conflict with no end in sight. Executive estimates show oil price rises costing US$120 million weekly via Mepco if above US$100 per barrel, potentially US$3,000 million total; currently over US$50 million weekly. “We have to examine this system and make proposals,” Quiroz said. He added: “What we cannot do is look at the ceiling and then say, ‘oh, look at the money we spent’,” stressing needs for security and health funding. No bill yet, but one will enter Tuesday to fund the Fepp, which has only US$5 million left; otherwise, paraffin prices rise Thursday. “We are making an effort to provide resources, but that effort requires joint legislative action,” he stated. Senator Yasna Provoste (DC) saw it as inability to maintain traditional stabilization: “We cannot support this government passing a war-related hike to families.” Senator Diego Ibáñez (Frente Amplio) noted: “The minister did not rule out eliminating the Mepco,” and they will review the bill to assess citizen benefits. Created by Law Nº 20.765 on July 9, 2014, Mepco adjusts specific fuel taxes to stabilize gasoline, diesel, and other vehicle fuels. The government suggests targeted measures, like paraffin subsidies for students.
