The government raises the mandatory cut of the biofuel law by 50% due to the lack of diesel

The national government will raise a 50% the mandatory cut of the biofuel law increase the supply of diesel, as announced by the Ministry of National Economy.

To measure it will be implemented through a resolution of the Secretariat for Energy, which will increase the mandatory cut of the Biofuels Law for small and medium-sized enterprises by 50%, bringing it to 7.5%.

A decree will also be published which “establishes by 60 day deadlines the Additional Temporary Mandatory Cut Regime for Biodiesel (COTAB), aimed at increasing the supply capacity of grade 2 and grade 3 diesel.

“This regime will allow a transitional and exceptional mandatory cut of an additional 5 percentage points for all supplier companies. For this additional segment, prices and volumes will be freely agreed with a cap on the diesel import price,” explained the ministry.

In this context, the economic portfolio explained that “the transitory increase in the cutting of biodiesel can ensure rapid incremental supply and generate savings in foreign currency for the economy “.

In addition, he explained that “Argentina today has installed a biodiesel production capacity that exceeds the mandatory cutting” and stressed: “This volume of incremental supply could represent more than 30% of imports monthly average of diesel in the first quarter “.

“The global energy situation today gifts scenarios of shortage coupled with high diesel prices, Domestic diesel demand has undergone increases of over 14% during the first quarter of the year, compared to the same period of the previous year, “the ministry explained in a statement.

At that point, he indicated that “the increases have an impact on domestic refining capacity, which has generated pressure on imports and complex situation in terms of adequate supply the volumes the market needs “.

“The volumes sold in the diesel market in the first quarter of 2022 exceeded those of the same period of the previous year by more than 580,000 m3. In the same period, imports exceeded the previous year by more than 530,000 m3 (112%), exceeding the million cubic meters and with an average of 250 thousand cubic meters per month “, highlighted the economic portfolio.

Finally, the Ministry of Economy stressed: “This highlights the need for alternative sources of supply which allow to increase the offer in the short term e ensure a growing supply Of question “.