Strike Ends, Gas Pump Prices Continue to Climb

May 23, 2008

A nationwide transportation strike that had shut down Nicaragua for 12 days came to an end May 17 following an announcement by President Daniel Ortega that the government would offer a $1.30 subsidy for every gallon of diesel fuel sold to taxis and buses.

With the new subsidy, which is being applied at 60 participating Petronic and Shell gas stations across the country, Nicaragua went from having the most expensive diesel in Central America to having the cheapest, now at $3.15 for  taxi and bus drivers. Some 75 percent of Nicaragua’s transportation sector uses diesel fuel.

Ortega said that Venezuelan funding under the Bolivarian Alternative for the Americas (ALBA) would cover 30 cents of the subsidy, but he did not mention where the other dollar would come from, raising new concerns about the transparency of his administration’s finances.

Ortega announced several other initiatives for the transportation sector, such as the importation of 25,000 new tires, brake systems and motor oil. He said Nicaragua will also install electronic passenger counters on inter-urban buses and 3,000 kits to convert taxis from gasoline to more cost-effective gas-fueled systems. The transportation cooperatives will be able to buy this equipment at cost, with ALBA-funded financing options over a determined period, Ortega said.

The president’s May 16 speech – his second national address in three days – was not all good news. Ortega also announced another price increase for gasoline and diesel for the rest of the country, putting a gallon of gasoline above 100 córdobas ($5.20) for the first time ever. Super now costs 102 córdobas ($5.30) a gallon, and diesel 98 córdobas ($5.10).

That announcement will most likely increase the cost of food prices yet again this week.

While the transportation strike has ended, the situation in Nicaragua remains precarious. Drivers of tractortrailers did not receive the subsidy they had asked for, and diesel prices were not frozen as part of the subsidy. That means that as pump prices continue to climb, the $1.30 subsidy will lose its value over time.

 

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