Press release 260615: Fuel prices July 2015

The Bureau Telecommunication & Post (to be referred to hereinafter as: the Bureau) by means of this press release gives further information on the recently established price increase in the tariffs for Mogas 95 and Low Sulpher Diesel (LSD), as agreed upon by the government of Curaçao and which shall be valid as of July 1, 2015.

Prior to addressing the cause of the tariff increase, you will first find an explanation below, regarding the composition and the calculations of these regulated tariffs.

Tariff regulation of fuels

The point of departure of the current regulation of the fuel prices concerned the approval by the Council of Ministers of the “Guideline Tariff Regulation of Fuels” dated January 19th, 2011, which was subsequently adjusted on August 10th, 2011 and January 28th, 2015. Based on the current guideline the Bureau advises the government on a monthly basis relative to the regulated fuel tariffs (Mogas 95, LSD, LPG and fuels on behalf of Aqualectra).

The tariffs for the regulated fuel products are composed from various components in accordance with the Tariff Guideline. The composition of the different components is presented below for the products Mogas 95 and LSD for the month of June, as well as July 2015.

 
jun-15
jul-15
     
jun-15
jul-15
Products
Mogas 95
Mogas 95
    Products
Gasoil LSD
Gasoil LSD
Unit
NAF/Ltr
NAF/Ltr
    Unit
NAF/Ltr
NAF/Ltr
Purchase price
0.9387
1.0192
    Purchase price
0.8960
0.8960
Import Duty LSD         Import Duty LSD
0.0000
0.0000
Margin Curoil
0.0900
0.0900
    Margin Curoil
0.0757
0.0757
Excise-duty
0.4134
0.4134
    Excise duty    
Surplus/Shortage (Recovery)
-0.0723
0.1297
    Surplus/Shortgage (Recovery)
-0.1069
0.0167
Cross- subsidy
0.0000
0.0000
    Cross-subsidy
0.0000
0.0000
Wholesale Turnover tax 6%
0.0865
0.0914
    Wholesale Turnover Tax 6%
0.0583
0.0583
Dealer Margin
0.1557
0.1557
    Dealer Margin
0.1557
0.1557
Retail Turnover tax 6%
0.1011
0.1062
    Retail Turnover Tax 6%
0.0711
0.0711
End user tariff
1.7131
2.0056
    End user tariff
1.1499
1.2735
Price at the pump
1.713
2.006
    Price at the pump
1.150
1.274

For each of the components a short explanation follows below:

  • Purchase price: weighted average based on the purchase invoices from Curoil;
  • Import Duty: import duty was levied only on LSD, (at present 0%);
  • Margin Curoil: the wholesale margin for each litre of Mogas 95 and LSD sold;
  • Excise Tax: the excise tax is fixed at 41,34 cent and is only levied on Mogas 95;
  • Turnover Tax: turnover tax of 6% for wholesale and retail;
  • Surplus/Shortage: this item is a combination consisting of the recovery and the quarterly corrections;
  • Cross-subsidy: cross-subsidizing in combination with LPG Account in order to maintain LPG 100 and LPG 20 tariffs stable;
  • Dealer margin: the retail margin for each litre Mogas 95 and LSD sold;
  • End user tariff: Added sum total of the above-mentioned items.

The average purchase price for the next following month is determined on the basis of the purchase invoices of Curoil over the past month, which are submitted to the Bureau by Curoil. The purchase price and therewith also the tariff for July 2015 is therefore based on the weighted average of the purchase invoices of Curoil in May 2015. Afterwards it will become apparent from the purchase invoices for the month in which the tariff was applicable, whether the tariff was determined too high or too low and a negative or positive correction is effected quarterly. This latter correction takes place based on the item “Surplus/Shortage”. In August 2015 it will therefore become apparent from the purchase invoices of July 2015, whether the tariff for July 2015 had been determined too high or too low.

The purchase price of LSD does not show any changes for that matter, since Curoil maintains a (buffer) stockpile for approximately two months, and therefore there were no purchase invoices for LSD in the month of May 2015.

The component ‘surplus/shortage’ consists of a recovery which is practically constant and a varying correction quarterly. The recovery is intended to compensate Curoil for coverage below cost due to a delay in timely adapting of the price during the first half of 2011. This recovery is started on 5 July 2011 for a period of 60 months. With the quarterly correction a surplus or shortage is quarterly compensated for Curoil, as was already explained above. A surplus or shortage might therefore come into being if it turns out afterwards that the monthly fixed tariffs should prove to be too high or too low as compared with the actual purchase invoices of Curoil for the relevant month.

Tariff increase Mogas 95 and LSD in July 2015

The tariff increase for Mogas 95 is caused in the first place by an increase of the purchase price of approximately NAF. 0,08 per litre with regard to the month of June 2015.

In the second place the change in the component ‘surplus/shortage’ is of importance. In June 2015 there existed a negative correction of NAF. 0,07 per litre to compensate a surplus from the first quarter. However, because the purchase prices vastly increased during the second quarter, a shortage came into being with Curoil in said period. As a consequence of same, this shortage has to be compensated, which leads to a positive correction of NAF. 0,13 per litre. Needless to remark that these price increases furthermore become evident from price of Mogas 95 (Platts) in the world market. Starting as of July 2015 this change in the component ‘surplus/shortages’ therefore entails an increasing effect of approximately NAF. 0,20 per litre.

The tariff increase for LSD is a consequence of the adaptation in the component of ‘surplus/shortages’. For LSD the purchase prices rose only slightly during the second quarter. As a result of this a considerably lower shortage as compared with Mogas 95 came into being with Curoil, so that a limited positive correction of NAF. 0,02 per litre was applied. However, since in June 2015 a negative correction on LSD of NAF. 0,10 per litre was valid, here this also results in an elevating effect on the tariff of NAF. 0,12 per litre.

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For more information about the contents of this press release contact Mr. Edwin Bogert on 463-1700. For general information regarding BT&P contact us.

 

Contact Info

Beatrixlaan 9, Curaçao
P.O. Box 2047
Phone: (5999) 463-1700
Fax: (5999) 736-5265