Venezuela still mulls fuel price hike, takes hit on oil fall

CARACAS, (Reuters) – Venezuela is still considering raising domestic fuel prices that are the world’s cheapest, and is taking a big hit in revenues due to the global fall in oil prices, President Nicolas Maduro said.

The South American OPEC nation receives 96 percent of its foreign currency revenues from oil, so the plunge in global oil prices to four-year lows has left it in a quandary at a delicate time of probable economic recession and foreign debt maturities.

“There’s been a huge fall in the oil (price),” Maduro said in a speech late on Thursday.

“We’ve lost 30 percent of our dollar revenues, in this last month. That’s not a trifle,” he added, without elaborating.

Maduro’s government has previously suggested it could hike the heavily subsidized price of gasoline, which sells for the equivalent of less than six U.S. cents per gallon, or about 1.4 U.S. cent per liter, at the official exchange rate, and less than 1 U.S. cent a gallon at the black market rate.

Officials say the subsidy costs some $12 billion per year.

Analysts estimate Venezuela will lose around $700 million of export revenue per year for every $1 drop in the price of oil.

Maduro, however, has repeatedly said that both foreign debt payments and social spending, especially on the socialist government’s popular welfare programs known as “missions”, will be guaranteed going forward.

“Venezuela has the resources to go forward,” he said.

The government has been floating the idea of a price hike for about a year, but is wary the impact on annual inflation that is already 63.4 percent.

A 1989 fuel price sparked massive riots that claimed hundreds of lives in an event known as the “Caracazo” that traumatized Venezuelans.

“When the chance arrives, in consensus with the country and our people, to establish a new system of gasoline prices …. all the resources from that will go directly to the missions,” he said.

“One day that moment will arrive, either in what remains of this year, or the next, or the following, the day will come.”