The progressive elimination of the gasoline subsidy hits Venezuelans | International

A man refuels his car in Caracas on March 16.STRINGER (REUTERS)

Huge lines of cars were stuck in a protest by passenger carriers in Caracas demanding the elimination of the gasoline subsidy. It is a rare scene in the Venezuelan capital, better supplied after the 2020 crisis when Nicolás Maduro had to ration supply and resort to the help of his Iranian partners to alleviate the serious shortage. But, this time, the reason for the claim these days is general and begins to expand.

At least a hundred gas stations throughout the country began, without further official notice, to dispense fuel at what the Maduro government has called “international price” or “dollarized gasoline,” which is actually a fixed rate of 50 cents. dollar per liter, a real bargain compared to the jump in recent days that some countries are experiencing as a result of the energy crisis due to the Russian invasion of Ukraine, but which in a country with 96% poverty is still very expensive for most.

A group of motorists and transporters protested this Wednesday in San Mateo, a small town in the center of the country. The only service station in that municipality stopped selling at the subsidized price in bolívares, as did those in neighboring towns. Slowly, the Government has been cutting the historical subsidy to the fuels that it has deprived in Venezuela. Until a few years ago, the tank was filled and the dispatcher was paid with some cookie or other species, since the price was frozen for years and was exceeded by inflation. It was the cheapest gasoline in the world.

With the disappearance of the stations that sell at a subsidized price, changes were made to the Sistema Patria platform through which this monthly quota of 120 liters of gasoline is accessed at practically one dollar for a full tank, but with the price added bonus of spending hours—and sometimes days—in queues. A new requirement has been imposed: drivers must go to refuel at 0.10 bolívares per liter on a specific day of the month, according to the terminal of the identity card, a measure that seeks to decongest the stations and that is beginning to give results. Before, the quotas were all updated at the beginning of the month and at that time the drivers ran to recharge.

It was Maduro who dared in 2016 to raise the price of gasoline for the first time in more than 20 years. This is how he conjured up the Venezuelan ghost that the rise in gasoline could unleash a social explosion like the one experienced in 1989 in the so-called Caracazoafter a package of adjustment measures implemented by President Carlos Andrés Pérez.

Now the Chavista leader is beginning to make his own adjustments in the search for more income and gasoline, for which Venezuela stops receiving some 12,000 million dollars a year by almost giving it away, is one way. After the 2020 shortage, and amid the sanctions on PDVSA, he managed to reactivate some refineries and increase production with supplies and advice from Iran. In the last four months of 2021, Venezuela was producing some 85,000 barrels of gasoline per day, enough to supply the local market, union sources assure, but shipments to Cuba and smuggling —despite the recent dismantling of some trafficker mafias— continue to subtract from the national consumption.

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taxes and salary

With the collapse of public finances due to the decline in income and the reduction of almost 80% of GDP in seven years, Maduro is looking for a source of money in the pockets of Venezuelans through more taxes. The National Assembly also approved a new tax on transactions made in foreign currency at a time when almost 70% of operations in Venezuela are carried out in dollars, Colombian pesos and even reais. This year, the fees for procedures in registries and notaries were also increased, the rates of some services that during most of Chavismo have been almost free, at the cost of their collapse, and the tolls on highways eliminated during the Government of Hugo Chavez.

Last week, Maduro increased the minimum wage from two to almost $30, ten months after the last increase, and has said it will be financed by tax revenues. “When the growth of the economy arrives, saving part of the taxes and guaranteeing the issuance of bolivars with the oil wealth and the sale of gold, we are going to have a salary recovery plan,” he said.

Although the adjustment appears as a substantial increase, at a time when inflation is contained, it is little for the Venezuelan economy. “We cannot continue accepting death pensions,” says Pedro García, leader of the national federation of retirees and pensioners. The salary adjustment has been received with a massive day of protests by pensioners and public sector workers held this Wednesday, as it is still insufficient to pay for a monthly food basket that exceeds 350 dollars.

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