Chile earmarks $1 bn to control fuel prices

June 3rd, 2008 - 6:37 pm ICT by IANS  

Santiago, June 3 (IANS) Chile has earmarked $1 billion to the country’s oil stabilization fund to hold the price line of fuel, EFE news agency reported Tuesday. Chilean President Michelle Bachelet announced the move during a press meet at La Moneda Palace Monday.

“The measure will allow the prices of gasoline, diesel and kerosene, which currently cost around $5 a gallon, to fall by about 42 cents a gallon,” the president said.

“I have decided to take a significant step to protect our country from the fluctuation of fuel prices,” Bachelet said.

The fund provides subsidies when the price is high and charges taxes when it is low. In practice its original goal to stabilize prices has been turned into a subsidy to alleviate the high cost of crude and its derivatives.

The latest wave of oil price rise has sparked strong protests around the country and truckers have called a 48-hour national strike beginning Tuesday.

The truckers association had recently called for the complete elimination of the fuel tax and the injection of at least $500 million in the fund.

Besides providing money for the stabilization fund, Bachelet also announced a $250 million injection of capital for state-owned oil company ENAP to “reinforce and guarantee the supply of fuel in Chile”.

She also referred to long-term policies, with emphasis on the diversification of energy sources for the country, which has to import all the oil it consumes.

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