Request to raise fuel prices provokes sharp criticism

June 16, 2016
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The National Oil Refinery (RECOPE) last Friday filed a petition to raise fuel prices that, if approved, would be the fourth increase this year.

The announcement came the same day that the Constitutional Chamber of the Supreme Court, or Sala IV, ruled in favor of a request from RECOPE employees asking that costs of benefits from their collective bargaining agreement be funded through fuel prices.

RECOPE’s request and the Sala IV’s ruling sparked a general rejection among business groups, political leaders and citizen groups who say it’s unfair to pay for benefits they consider excessive.

Sala IV’s ruling now offers the refinery the opportunity to file for another price hike request in the near future, as the Public Services Regulatory Authority (ARESEP) last year prevented RECOPE from including employee benefits in its price-setting requests.

RECOPE’s newest petition is asking for increases of ₡84 in the per-liter price of super gasoline, of ₡76 for plus gasoline and of ₡70 for diesel.

If approved the per-liter price of super will exceed ₡600, rising from ₡518 to ₡602 ($0.95 to $1.10). Plus gasoline would go from ₡498 to ₡568 ($0.91 to $1.04) and diesel from ₡380 to ₡450 ($0.69 to $0.82).

RECOPE justified its request based on variations in international fuel prices and as compensation for changes in import costs recorded between March and April.

Challenges to the ruling

Sala IV in a news release on Tuesday reported that it admitted a complaint against its ruling filed by Libertarian Movement lawmaker Otto Guevara.

Guevara’s complaint argues that various articles of RECOPE’s collective agreement are unconstitutional, as they violate “principles of legality, reasonableness, proportionality and balance of its budget.”

The lawmaker also asked RECOPE’s executive president, Sara Salazar, to disclose the terms and costs of current negotiations with the workers’ union to update their collective agreement.

Citizen group Asociación de Consumidores de Costa Rica (Costa Rican Consumers Association) announced that it  will file another complaint before Sala IV next week.

The group said its complaint will ask justices to stand for consumers’ rights and rule that costs of a public service can not be used to finance collective agreements.

Christian Democratic Alliance legislator Mario Redondo on Monday said he will challenge the Sala IV’s ruling as he believes justices “made a mistake.”

Redondo said the ruling “is seriously hurting Ticos’ pockets” and claimed that “RECOPE’s collective agreement is one of the most abusive in the country.” The lawmaker has yet to announce when he will file the claim.

Protests against RECOPE’s request also came from the business sector.Franco Arturo Pacheco, president of Costa Rica’s Union of Private-Sector Chambers and Associations (UCCAEP), said earlier this week that it will submit another complaint before the Sala IV.

Pacheco said UCCAEP leaders and associates will file a complaint “against privileges enjoyed only by a small group of public employees and that are affecting Costa Rica’s competitiveness.”

Leaders of the Costa Rican Chamber of Industries (CICR), which brings together a large group of private sector companies, in a news release agreed with UCCAEP’s statements that Sala IV’s ruling will affect the country’s competitiveness.

CICR deputy director Carlos Montenegro said justices’ ruling left them speechless, adding that “it’s not fair that 4.8 million people and 41,000 companies that buy fuel are forced to pay for privileges of RECOPE’s 1,742 employees.”

A citizen iniciative called “Ya no más RECOPE” (No more RECOPE) is calling for a march against the refinery, scheduled at 9 a.m. on June 25 at La Sabana Park, west of downtown San José.

Demonstrators will march through the capital’s Second Avenue until reaching the Legislative Assembly, where group leaders will deliver lawmakers a petition to take action against RECOPE’s price hike request and its workers’ benefits.

The group on its Facebook profile said it’s up to the citizens to take actions to curb RECOPE’s abuses, as “President Luis Guillermo Solís has turned his back to the people.”

Members also claim it is unfair to fund extra-salary benefits that “allow RECOPE to pay their janitors and drivers monthly salaries up to ₡3 million ($5,500), while other workers barely make enough to survive.”

Controversial benefits

RECOPE’s workers union filed the complaint before Sala IV last year following an ARESEP ruling stating that costs for extra-salary benefits cannot be bundled into costs affecting the calculation of fuel prices.

According to the national budget, benefits of RECOPE’s collective agreement in 2015 represented expenses for ₡22,720 million ($41.5 million), or 20 percent of the agency’s operating costs.

The refinery has maintained that the terms of its collective agreement are confidential as they are currently under renegotiation, but various media outlets made several of them public.

Last year RECOPE granted its employees some twenty economic benefits and perks ranging from extra-salary bonuses to financial aid.

Among them employees receive bonuses for the birth of a child, for buying school supplies and for paying for day care services.

Despite having health coverage by the Social Security System, employees get bonuses to pay for private medical treatments, medicine and dental services.

The company also subsidizes employee’s meals at the cafeteria and the workers’ union gets funds to pay for social, sports and cultural activities and parties.

Those payments last year prompted President Luis Guillermo Solís to issue a directive banning all public agencies from using taxpayer funds to hold recreational events for their employees.

The presidential directive followed a wave of outrage on social media after RECOPE published a document seeking a ₡6.8 million ($12,600) public bid to organize a Christmas party for a group of its employees.

The most significant expenses are bonuses for every year of service, as well as others based on merit and work performance.

The cost of RECOPE’s collective agreement for 2016 is of ₡23,000 million ($41.9 million), according to the national budget.

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