IN a little over two months Ecuador would have to sell subsidized fuel to Peruvian carriers. This, after the Court of Justice of the Andean Community (Tjcan) issued a verdict in the framework of the AI ​​05 2021 process, on July 7, so that in maximum period of 90 days, adopt the necessary measures to stop the behavior that was declared “contrary to the legal system of the Andean community”.

The behavior condemned by the Republic of Peru on July 8, 2021 showed that Ecuador would charge a higher fuel price to international ground carriers of goods and passengers, including Peruvian carrierswhich was circulating with a foreign license plate in the territory of Ecuador.

“This price differentiation has caused Peruvian freight and passenger carriers to pay more for fuel, affecting the logistics costs of the Peruvian trade and causing the loss of competitiveness of the Peruvian carrier compared to the Ecuadorian counterpart,” states the Ministry of Foreign Trade and Tourism (Mincetur) of Peru.

In fact, Ecuador has a fuel subsidy policy that benefits Ecuadorian citizens in general and applies to regular gasoline and premium diesel. Ecuador currently sells its fuel at international prices for vehicles with international license plates, but retains a subsidy for local carriers.

From the Ecuadorian government, the Minister of Production, Industry and Foreign Trade, Daniel Legarda, reported that “our ministry, in cooperation with the State Attorney’s Office, will activate the instance of clarification,” he said.

In the meantime, Oswaldo Erazo, executive secretary of the Chamber of Petroleum Distributors (Camddepe), says Ecuador has 90 days to start selling subsidized fuel to Peruvian heavy and public transport. For Erazo, this can lead to a series of problems for the Government.

For Erazo, almost “we will even have to pay them the toll.” Peruvian carriers do not have subsidized fuel, but they also have high taxes, he says. Therefore, it would be very advantageous for these carriers to refuel in Ecuador since the price of Ecuadorian premium diesel is US$1.75. While without the subsidy, the price is $2.60. However, in Peru the price for the carrier is $4.36 because they have different taxes related to fuel consumption. The same is the case with gasoline, which costs $2.40 in Ecuador, but at the international price it would be $2.63, while in Peru it is sold for $4.67.

Erazo believes that the Ecuadorian government should take some measures in this regard. In any case, according to unofficial information, there is no possibility of appeal in this case.

On that topic, Petroecuador’s national marketing manager, María Elisa Soledispa, explained that as a public company, Petroecuador is limited to calculating prices in accordance with the regulations, which is $1.75 for car diesel and making decisions on that is not within the company’s reach. He commented that the fuel subsidy is intended for Ecuadorians and to maintain the operation of transport and citizenship. “We will wait to see the guidelines,” he said.

For the Peruvian ministry, this indicates that “this sentence represents excellent news for the country.” In addition, the head of the sector, Juan Carlos Mathews, said that they expect the Ecuadorian government to comply with what Tjcan ordered, “with the aim that our carriers can compete without discrimination and on equal terms”.

The Peruvian position, in defense of the national carriers, is based on the fact that Ecuador’s behavior violates the principles of non-discrimination, national treatment, equal legal treatment and free competition, which are provided for in Andean Decisions 837, 398 and 608, as well as Article 4 of the Treaty Establishing the Andean Court community. This is also indicated in the decision of that body.

In April 2021, General Secretariat of the Andean Community already declared Ecuador in a situation of non-compliance with the legal system of the community.

fuel subsidies they reached $4,560 million in 2022. This is a record figure that doubles what was spent on the same item in 2021, when it was $2,214 million.