Policy motor vehicles
Purchase of fuel products
For the supply of fuel products, Curoil is dependent by contract on PDVSA, the only fuel producer in Curaçao. An exception to this is the product LSD that is purchased internationally by Curoil for the local market.
An important condition that applies to the distribution of regulated fuels is that the composition of these must comply with set quality criteria as laid down in the Guidelines regulation quality fuels dated 28 September 2011.
In connection with this, for environmental reasons, through the years the transition was made from to 2 types of gasoline, Mogas 92 and Mogas 95, to one type of gasoline, Mogas 95. Also for diesel, the quality step was taken from High Sulfur Diesel (HSD), with a relatively high sulfur level, to Low Sulfur Diesel (LSD).
For diesel it is a short-term aim to move to Ultra-Low Sulfur Diesel (ULSD), which is even cleaner than LSD. Research into this is on-going. Considering the developments in the automobile sector regarding the use of increasingly cleaner diesel, this transition is virtually unavoidable.
With a view to the policy objectives aimed at affordability, availability and sustainability of fuels, the policy regarding distribution will be:
- Aimed at sustainability of fuel product
- Aimed at an as high as possible quality of fuels
- To follow international developments
- To pursue the lowest possible prices
Wholesale
In the wholesale market for fuels for motor vehicles the storage, sale and distribution for motor vehicles (Mogas and LSD) is entirely in the hands of Curoil. This means that there is no market operation. Mogas supplied by PDVSA is held by Curoil in its own storage on the premises ISLA and from there Curoil supplies the retail market (the gas station operators). Supplies of LSD are kept in storage tanks at Motet Wharf and distributed through Isla to the gas station operators. Besides this, Curoil also delivers fuels to companies other than the gas station operators, which companies have their own diesel generators or their own gas station, like the ABC bus company.
With a view to the policy objectives aimed at affordability, availability and sustainability of fuels, the policy regarding wholesale will be:
- The stimulation and warranting of efficient purchase of fuels so the end user may enjoy greater price benefits
- Creating sufficient storage facilities, realized by Curoil, to be able to comply with the supply warranty and drawing up rules to warrant a strategic stock
- Adopting clear rules that facilitate wholesale and retail delivery and at the same time prevent abuse of power by Curoil and unfair competition between gas station operators
Retail
The retail market consists of 27 gas stations that are part of three organizations, COPDA (Curaçao Oil Products Distributors Association), Asogas and Curoil. From the Ministry of Economic Development there currently is a policy in place where this number may rise to no more than 30 and expansion shall only be permitted on the basis of sufficient demand and need for a gas station in the region where the expansion is at hand. This limitation refers to the small scale of the market and the need to limit the risks of bankruptcy, with a view to warrant security of supply.
With a view to the over-arching policy objectives aimed at affordability, availability and sustainability of fuels, the policy regarding retail is aimed at:
- Using a clear business location and decentralization policy regarding gas station operators
- Stimulating more market operation based on a balanced price competition system so gas stations, in the interest of the end user, may mutually compete based on efficient business operations, automation and secondary income so as to influence their own market position
- Adopting stricter rules regarding the granting of licenses to exercise optimal supervision on the number of gas station operators that are active in the retail market
Prices
Wholesale prices and retail prices for fuels for motor vehicles are fully regulated on the basis of the Prices Ordinance 1961, (Official Gazette 1961, no. 117)* and the Guideline tariff regulation fuels. Prior to July 2011, in the period when pricing of fuels belonged to the portfolio of the Ministry of Economic Development, the changing prices on the international trade market (price of oil) mostly formed the basis for the price determination of fuels. Due to the local market prices not being changed along (in time) with the international prices, in the end these price fluctuations negatively affected the result of Curoil and as such also the fuel prices for the consumer.
Accrued shortages in the period between the approval of the Guideline tariff regulation fuels up to the implementation of this (January 2011 until June 2011) were integrated in the regulated fuel tariffs during a term of 60 months, by way of a “recovery”. These shortfalls have been completely covered in the meantime been and therewith the recovery has been rescinded as per February 2016.
With a view to the over-arching policy objectives aimed at affordability, availability and sustainability of fuels, the policy regarding the fuel prices for motor vehicles is aimed at:
- Preventing of the adjustment of wholesale and retail prices becoming overdue
- Strict compliance with the Guideline tariff regulation fuels to limit the risks for a budget deficit and to warrant the end user interests
* Note: This National Ordinance has not yet been adapted to the new constitutional structure effective as from 10 October 2010.