WILLEMSTAD - Starting Tuesday, September 3, 2024, the regulated prices for gasoline and diesel on Curaçao will increase. Conversely, the rates for electricity and water will decrease as of Sunday, September 1, 2024. This update was announced by the Regulatory Authority of Curaçao (RAC) in its monthly press release. The RAC oversees the pricing of oil products and utility services.
Fuel Pricing Breakdown
The pricing structure for Mogas 95, Gas Oil LSD, LPG 20, and LPG 100 includes several components:
Purchase price
Import tax LSD
Fuel supply guarantee (1a)
Fuel supply guarantee (1b)
Curoil margin
Excise duties
Surplus/Deficit (Recovery)
Cross-subsidy
Wholesale VAT 6%
Dealer margin
Retail VAT 6%
Some components may have a zero rate, either permanently or temporarily. The wholesale price includes the first nine components, while the retail price includes all components.
The calculation begins with the purchase price, which is determined monthly based on the available fuel inventory at the end of the previous month. For instance, the purchase prices used for September 2024 are based on the fuel inventory as of the end of July 2024. If Curoil's inventory information is insufficient, recent international price quotations are used instead. These purchase prices are also compared to international price quotes. Due to the delay in data, discrepancies between the regulated purchase price and actual purchases in a given month are adjusted through the 'Surplus/Deficit' component.
The end-user price for Mogas 95 is set to increase slightly, mainly due to a rise in the surplus/deficit component compared to the previous month. The end-user price for Gas Oil (U)LSD will also see a slight increase, again primarily due to the increase in the surplus/deficit component.
Tariff Calculation for Water and Electricity
The pricing structure for water and electricity comprises two components: the base rate and the fuel clause. The fuel clause for electricity includes two elements: the cost of purchasing electricity and fuel costs.
The 'purchases' refer to the price of energy supplied by third parties, such as wind and solar energy, while the fuel costs relate to energy generation by Aqualectra itself.
Similarly, the fuel clause for water consists of two elements: 'purchases,' based on the price of water supplied by a third party, and electricity costs for water production by Aqualectra.
However, the utilization of different production resources, known as the 'production mix,' varies each month. Therefore, the RAC (Regulatory Authority of Curaçao) determines the fuel clause monthly based on Aqualectra’s forecast of the production mix for the upcoming month, in this case, September 2024.
If it turns out that the component was too high or too low the following month, it will be adjusted. For instance, any discrepancies would affect the month of July 2024. The base rate for both water and electricity is set annually by the RAC. This rate covers all other (fixed) costs related to the production of electricity and water and all distribution and delivery costs, such as personnel expenses, maintenance costs, depreciation, etc.
The decrease in electricity rates is due to lower average fuel costs for electricity production combined with the anticipated production mix and a significantly lower correction factor for July 2024. The reduction in water rates is attributed to lower electricity costs for water production and a lower correction factor for July 2024.
Approval and Determination
The RAC advises the Council of Ministers (RvM) on the new rates. Only after the RvM approves the proposal does the Minister of Economic Development, who is also responsible for energy matters, set the rates. These become the maximum rates that can be applied for one month. This procedure, which considers both international and local factors, ensures that the RAC independently and transparently oversees the continuity and fairness of fuel, water, and electricity supply to the local population.