Petroecuador to raise premium gas prices, cut jobs

The Ecuadorean state oil company Petroecuador will eliminate longstanding subsidies to premium gasoline in a gradual way while it reduces personnel and sells gasoline stations, all amid pressure from lower crude oil export revenue, the company´s chief official Carlos Pareja said.

“If there was a mistake, today is the moment to rectify it and the decision to add 2 cents to the price of super gasoline is because there is an elevated subsidy and that cannot go on," he said during an interview with television station Teleamazonas. "This is why there will be an increase of 2 cents per gallon, each first of the month, so as to reach the $2.30 per gallon of gasoline super which is the same other marketers have.”

Declines over the past year in prices of crude oil that the company exports have affected the company's finances, so there is a need to be “creative” to improve performance, he added, according to information confirmed by Petroecuador´s communications office on Monday.

Pareja said that it was bad business for Petroecuador to sell a subsidized premium gasoline because it does not produce enough for the domestic market and a “large part” is imported at an annual cost to the company of over $140 million. In addition, selling gasoline at $2 per gallon compared with the $2.30 per gallon market price was “unfair competition” with other fuel marketers. Once prices are adjusted, there will be real competition, he added.

Prices for 80 to 87 octane gasoline as well as diesel will remain unchanged, and jet fuel has already been adjusted to real values.

Pareja also said the company will seek the best strategies to sell or transfer the Petroecuador fuel stations and will analyze in the future, through "dialogue with interested sectors," ways to obtain the better results.

“We have a chain with 217 affiliated stations and 49 fully owned, of which seven are in the bigger cities,” he said.

As for payroll reductions, “until Friday, Oct. 2, a total of 300 people have ended ties with the company and the adjustments will continue with the people that do not contribute, with those that do not want to work in Petroecuador, with those that go only to meet a time schedule,” Pareja said. “We need to reduce the human resource in function of the operation and of the new strategic projects to optimize costs and spending."

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