WILLEMSTAD – Starting Tuesday, November 28, 2023, the regulated gasoline rate will decrease, and the diesel rate will increase on Curaçao. The water rate will also decrease effective Friday, December 1, 2023.
The electricity rate remains nearly unchanged. This is reported by the Bureau of Telecommunications and Post (BT&P) in its monthly press release on the matter. BT&P oversees the price developments of oil products and utilities.
Fuel Product Rate Calculation
The rate structure of Mogas 95, Gasoil LSD, LPG 20, and LPG 100 includes the elements: 1. Purchase price, 2. Import tax LSD, 3. Fuel supply assurance (1a), 4. Fuel supply assurance (1b), 5. Curoil margin, 6. Excise duties, 7. Surplus/Shortage (Recovery), 8. Cross-subsidy, 9. Wholesale sales tax 6%, 10. Dealer margin, and 11. Retail sales tax 6%. For some elements, a zero rate applies – whether temporary or not. The wholesale rate includes the first nine elements, while the retail rate includes all elements.
The purchase price, which initiates the calculation, is determined monthly for the following month based on the available fuel inventory at the end of the previous month. Thus, the purchase prices used for December 2023 are primarily based on the available fuel inventory as of the end of October 2023. In case the inventory information provided by Curoil is insufficient, recent international price quotations are used. These purchase prices are also cross-referenced with international price quotations. The element ‘Surplus/Shortage’ reconciles the differences between the regulated purchase price and the actual purchases in a given month due to this delay.
Price Fluctuations on the international market have been very strong in recent weeks, and developments on Curaçao are in line with this. Below is an overview of the oil price (WTI) and Platts prices for Mogas and LSD from June 2023.
The decrease in the end-user rate for Mogas 95 is caused by a significant drop in the purchase price due to a recent purchase that aligns with the international price quotation (Platts), along with a negative correction of the surplus/shortage component. The end-user rate for Gasoil LSD increases, among other reasons, because the purchase price is based on inventories purchased in September 2023, at which time international purchase prices were still relatively high. Furthermore, Gasoil LSD experiences a positive correction of the surplus/shortage component due to the elimination of the mitigating measure from the previous month and the regular correction. It should also be noted that international prices for Gasoil LSD have been higher than those for Mogas for quite some time, as clearly seen in the price development on Curaçao.
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 has 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 and solar energy, and the fuel costs involve the costs of energy generation by Aqualectra itself.
The fuel surcharge for water also has two elements, namely ‘purchases’ based on the price of water supplied by a third party and electricity costs for water production by Aqualectra itself.
However, the deployment of different production resources, 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 the month of December 2023. If it turns out a month later that the component was too high or too low, it is corrected. In this case, it pertains to the month of October 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 supply, such as personnel costs, maintenance costs, depreciation, etc.
The slight increase in electricity rates is mainly the result of lower average fuel costs for electricity production in combination with the expected production mix and a higher corrective factor for October 2023. The decrease in water rates is the result of slightly higher electricity costs for water production and a lower corrective factor for October 2023.
Approval and establishment
BT&P advises the Council of Ministers (CoM) on the new rates. Only after the CoM approves the proposal, the Minister of Economic Development, who is also responsible for energy matters, establishes the rates. These are then the maximum rates that can be applied for a month. With this procedure, taking into account international and local factors, the regulator BT&P independently and transparently ensures the continuity and fairness of the supply of fuel, water, and electricity to the local population.
Bron: Curacao Chronicle