Costa Rica Questions State Run Oil Company

High fuel prices are seriously affecting the economy, making it necessary to consider removing the state monopoly in favor of free importation.

Wednesday, July 31, 2013

Jorge Guardia in an opinion piece in Nacion.com explains that the country must make two important decisions, the first is what to do with Recope and the second how to reduce fuel costs. He sets out three options for the first situation.

The first option that could be taken, according Guardia is maintaining the status quo, in which Recope doesnt do any refining nor have refining capacity, a situation that has its pros and cons. That would allow for importing higher quality products but would maintain "an expensive and unproductive bureaucracy and would allow it continue to be used as the state's petty cash box and to lend itself to other things."

"The second would be to embark on a new refinery funded by the Chinese government," said Guardia. "But the most worrying thing about that is that in order to ensure a high return for Recope and its Chinese partner, the bill would be passed on to consumers, at the expense of domestic production."

The third and final option is to allow free importation, which "would help us get away from a bureaucracy which currently affects 7% of the final price of fuel, avoid being highly indebted by building a Chinese refinery and ensure the best quality" .



More on this topic

A Monopoly That Loses Money

February 2016

The state run oil company in Costa Rica registered losses above $24 million during the first nine months of 2015, despite having the highest prices in the region.

In the first nine months of 2015 the Costa Rican Oil Refinery lost more than $24 million. The state run company, which has had a monopoly in refining and sale of fuels in Costa Rica for more than half a century, has payroll costs representing 56% of its total expenditure.

Costa Rica: Business Opposition to Petrocaribe

July 2014

Businesses are asking for the elimination of the state oil monopoly by Recope as a solution to reducing the cost of energy and fuel.

The union rejected the possible entry into the petroleum agreement because of the interference that could come from the Venezuelan government in Costa Rican politics and because it means buying oil at the cost of greater indebtedness in the future.

Monopolies and Expensive Fuel

October 2012

Costa Rica, where fuels are under the state monopoly of the Costa Rican Oil Refinery (RECOPE), has become the country with the highest gas prices in Central America.

Juan Carlos Hidalgo, on his blog on Elfinancierocr.com, says the latest increase pushed up the price of better quality gasoline above $1.50, and that even President Chinchilla has made public her concern over the situation.

Agreement for chinese refinery vetoed in Costa Rica

March 2009

The Costa Rican Comptroller vetoed an agreement that would have allowed the construction of a $1 billion petroleum refinery.

The accord that was signed in 2008 between the state-owned companies, Costa Rican Petroleum Refinery (RECOPE) and the Chinese National Petroleum Corporation (CNPC) and authorized by president Oscar Arias, would have allowed the construction of a $1 billion, 12,000 barrel refinery in the Costa Rican Caribbean .

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