Venezuelan president Nicolas Maduro has proposed to create a consensus
around the need to increase the price of gasoline in the South American
OPEC nation.
Priced in dollars on the official exchange rate, a litre of petrol at
the pump costs one cent, and filling a 60 litre tank costs 60 US cents,
compared with US $67,20 in neighbouring Colombia.
The gasoline price in Venezuela has been fixed for the past 17 years,
costing the state an annual subsidy of $12.6 billion, according to
Rafael Ramirez, the president of state oil company PDVSA.
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President Maduro made the proposal at the close of the governing United Socialist Party of Venezuela (PSUV)’s congress last Thursday (prensa presidencial) |
“When a bottle of water costs three times more than filling a 50
litre tank for a vehicle, there’s a lag in the price of gasoline,” said
President Maduro, who made the proposal at the close of the governing
United Socialist Party of Venezuela (PSUV)’s congress last Thursday.
Maduro argued that a price increase would increase revenue for social
and infrastructural spending, at the same time denied that it responded
to a shortage in foreign currency reserves.
The proposal comes as the Maduro administration considers unifying
the country’s diverse official exchange rates and other measures to
resolve economic troubles.
Observers predict that the price of gasoline could be raised to meet
the cost price, at 2.7 bolivars (0.42 cents) per litre. According to
Maduro, the money saved by the increase would be split five ways in
order to fund mass housing construction, university scholarships, old
age pensions, anti-crime programs, and road maintenance and services.
The subject of fuel prices in Venezuela is politically sensitive, and
former President Hugo Chavez chose not to address the issue during his
tenure. Many still remember the Caracazo uprising of February 1989, when
an increase in fuel prices became the trigger for an explosion of
discontent in the context of mass poverty and the implementation of
neoliberal reforms by then President Carlos Andres Perez.
The Venezuelan opposition have criticised the possibility of
increasing the domestic gasoline price, arguing that the government must
first end the sale of subsidised fuel to regional allies through the
ALBA and Petrocaribe organisations. Such deals include the “oil for
doctors” exchange with Cuba, with which the opposition strongly
disagrees.
“They [the government] want us Venezuelans to pay for the
government’s gifts abroad…the government needs to be accountable,”
tweeted opposition leader Henrique Capriles on Friday.
Venezuelan economic analysts generally agree that an increase in the
domestic gasoline price is either desirable or necessary. But they warn
that coupled with a possible currency devaluation, the move could
further drive inflation, which is currently running at over 60%
annually.
PSUV congress comes to a close
Maduro’s proposal was one of a number of developments at the close of the PSUV’s national congress.
A total of 32 decisions were taken on party organisation, ideological
platform, and the country’s economic model. They include the decision
to promote more political education and participation among the party
rank and file, the reduction of the practice of co-option (naming posts
and electoral candidates from above) to only the president and top
national party leadership, and the promise to renew party authorities by
January 2015.
Maduro’s leadership received a boost after he was unanimously
designated the new party president. The Venezuelan head of state also
proposed that another conference be held in December to discuss
strategies for an “economic transition to socialism”.
The conference was criticised by the left wing dissident wing of the
PSUV for giving party mayors, state governors and parliamentarians the
automatic right to be conference delegates, and for not giving
sufficiently open discussion to the issues of internal democracy and
current economic problems. However the decision to limit the practice of
co-option was welcomed by several such figures.
Source: Venezuelanalysis
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