Energy: Changes in Form but Not in Background

The bill presented by the Executive Branch of Costa Rica to transform the state refinery Recope empowers the State to make alliances with private companies and "incursion into alternative chemical energy", but maintains the monopoly of fossil fuels.

Tuesday, April 9, 2019

On April 8, 2019, the Alvarado administration presented an initiative before the Legislative Assembly that seeks to transform the Costa Rican Oil Refinery (Recope) into the Costa Rican Company of Alternative Fuels and Energies (Ecoena).

Elfinancierocr.com reviews that "... If the bill is approved, Ecoena would be able to make alliances with private sector companies or constitute companies, with the help of the public or private sector, to implement new business and attract investors."

You may be interested in "Petroleum Oils: Imports up to September 2018"

The article adds that "... This initiative aims to transform the institution into the Ecoena, so that through a reform to Law No. 6.588 the entity can investigate, produce, import and export, industrialize, store, market and transport alternative chemical energy. With a change to this legislation, the institution could overcome the legal restrictions that have prevented it from continuing with the research and development of alternative energies."

There are other initiatives in the legislation that would change the fuel market. One of these is the 20,641 "Fuels Law" bill that is being discussed in the Legislative Assembly, which seeks to advance the abolition of the use of fossil fuels in Costa Rica and declare the national territory free of exploration and exploitation of oil and natural gas. It seeks to extend RECOPE's scope of action to biofuels and other alternative chemical energies.

In this regard, industrialists have pointed out that their main concern is competitiveness, because if companies do not have internationally competitive inputs, their ability to produce and place products on the market is compromised.

"We are concerned about the insistence that RECOPE in the best CODESA style, can open new companies to produce and industrialize biofuels and other fuels, which today are not in the monopoly of RECOPE. We are not opposed to blends, but we do not see an interest in opening to competition from local producers to supply the biofuels they want to mix," explained Carlos Montenegro, deputy director of the Chamber of Industries of Costa Rica, in a statement from the guild.

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Costa Rica: Opposition to Fuel Law

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Businessmen in the industrial sector are warning that "expanding the reach of the RECOPE and authorizing it to charge fuel rates is like giving them a blank check on which to write the numbers they want to spend."

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A report from the state run and monopolistic Costa Rican Petroleum Refinery indicates that during 2014 the country consumed 19 million barrels of oil.

From the report by the Costa Rican Petroleum Refinery (RECOPE):

According to the records from the Costa Rican Petroleum Refinery (RECOPE SA), sales for the period January to December 2014 increased by 2.12% compared to the same period in 2013, going from 3,023,400 m³ in that year to 3,087,620 m³ in the past year (equivalent to 19 million barrels).

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Six years after having started the program to incorporate it into the energy matrix, the percentage of ethanol in gasoline has fallen by 4.6% in 2006 to 1.4 in 2011.

One of the main problems faced by the Costa Rican Oil Refinery (RECOPE) for the successful implementation of the National Biofuels Program, is that they do not have a local supplier of ethanol.

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