WILLEMSTAD – Starting from Thursday, December 28, 2023, the regulated rates for gasoline and diesel in Curaçao will decrease. Additionally, the rates for electricity and water will decrease as of Monday, January 1, 2024.
This was reported by the Bureau of Telecommunications and Post (BT&P) in its monthly press release. BT&P oversees the price development of oil products and utilities.
Fuel Product Rate Calculation
The rate structure for Mogas 95, Gasoil LSD, LPG 20, and LPG 100 includes the elements: 1. Purchase price, 2. Import tax LSD, 3. Fuel supply guarantee (1a), 4. Fuel supply guarantee (1b), 5. Curoil margin, 6. Excise taxes, 7. Surplus/Shortfall (Recovery), 8. Cross-subsidy, 9. Wholesale VAT 6%, 10. Dealer margin, and 11. Retail VAT 6%. For some elements, the zero rate may apply – either temporarily or not. The wholesale rate includes the first nine elements, while the retail rate includes all elements.
The purchase price, which marks the beginning of the calculation, is determined monthly for the following month based on the available fuel inventory at the end of the previous month. Therefore, the purchase prices used for January 2024 are essentially based on the available fuel inventory as of the end of November 2023. In case the inventory information provided by Curoil is inadequate, recent international price quotations are used. These purchase prices are also compared to international price quotations. The element ‘Surplus/Shortfall’ reconciles the differences between the regulated purchase price and the actual purchases in a given month due to this delay.
The end-user rate for Mogas 95 continues to decrease compared to the previous month, primarily due to the ongoing drop in international prices combined with a negative correction of the surplus/shortfall component. The decline in the end-user rate for Gasoil (U)LSD is attributed to the decreased international purchase price in November. The recent purchases of Mogas 95 and Gasoil (U)LSD are based on the new improved product specifications. From January 2024, the enhanced fuels will also be part of the distribution in Curaçao, leading to a period with a mix of both old and new product specifications (also known as the ‘flush-out’ period).
Water and Electricity Rate Calculation
The rate structure for water and electricity consists of two components: the base rate and the fuel surcharge. The fuel surcharge for electricity comprises two elements: the purchase of electricity and fuel costs.
The ‘purchases’ are based on the price of energy supplied by third parties, such as wind energy and solar energy, while the fuel costs concern the costs of energy generation by Aqualectra itself.
Similarly, the fuel surcharge for water also consists of two elements: ‘purchases’ based on the price of water supplied by a third party and electricity costs for water production by Aqualectra itself.
However, the use of different production methods, also known as the ‘production mix,’ varies each month. Therefore, the fuel surcharge is determined monthly by BT&P based on Aqualectra’s forecast of what the production mix will be, in this case for January 2024. If a month later it is found that the component was too high or too low, it is corrected. In this case, it concerns the month of November 2023.
The base rate for both water and electricity is determined once a year by BT&P. This rate includes all other (fixed) costs for the production of electricity and water, as well as all costs for their distribution and delivery, such as personnel costs, maintenance costs, depreciation, etc.
The decline in electricity and water rates is the result of lower average fuel costs for electricity production and lower electricity costs for water production, along with a favorable forecasted production mix and a lower corrective factor for November 2023.
Approval and Establishment
BT&P advises the Council of Ministers (CoM) on the new rates. Only after the CoM approves the proposal does the Minister of Economic Development, who is also responsible for energy matters, establish the rates. These are then the maximum rates that can be used for one month. With this procedure, which takes into account international and local factors, the regulator BT&P monitors the continuity and fairness of the supply of fuel, water, and electricity to the local population in an independent and transparent manner.
Bron: Curacao Chronicle