Ecuador to end diesel subsidy for large shrimp farms
Ecuador said on Thursday it will end a diesel subsidy aimed at large shrimp farms as part of a plan to refocus its fuel subsidies on poorer constituents, a key demand of protesters who staged violent demonstrations earlier this year. Following the demonstrations, Ecuador’s government is working to exclude certain sectors from national fuel subsidies, in a bid to pay for social programs and meet protesters’ demands.
The subsidy will be cut for farms with more than 30 productive hectares beginning on Friday, the president’s press office said in a statement. “It is an ethical, responsible and socially focused decision,” the statement added, saying the government was “convinced that the subsidies should exclusively benefit the poor.”
The decision comes as President Guillermo Lasso, a conservative former banker, acts to fulfill a promise made to indigenous groups in October to target crude oil subsidies, which are on track to top $4 billion this year, to sectors that need them most. The move drew backlash from shrimp farmers, with Jose Antonio Camposano, president of the country’s aquaculture trade body, saying producers will now foot the bill of costlier fuel to work the pumping systems in their pools.
“This decision, which affects 82% of the national shrimp farming area, is being taken at the worst possible moment and without having been previously discussed,” he told journalists. Shrimp are Ecuador’s most important export after oil, accounting for $5.68 billion in sales in the year through September, according to Ecuador’s central bank.
The diesel subsidy will be maintained for shrimp farms of up to 30 hectares, according to authorities. In Ecuador, fuel subsidies are used in many sectors, and the government is applying benefit exclusion criteria for various sectors to make them pay prices according to international standards.
With the new measure, the government expects savings of around $160 million a year that it says will be invested in social services. Eliminating fuel subsidies for large shrimp farms was a request made by indigenous groups who held protests in June over high fuel prices and for better living conditions.
Lasso reached an agreement with indigenous groups in October after promising mechanisms for targeting fuel subsidies, taking as a reference certain exclusion parameters focused on the automotive sector.
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