The Fernandez government announced the elimination of the subsidies on propane gas used by industries, hotels and restaurants. The elimination of the subsidy will also affect transport vehicles that use 100 lbs tanks in their cars. Propane gas will now cost RD$56.19 the gallon, and a 100 lbs tank will sell for RD$560.
The government chose to maintain the subsidy on gas sold directly to consumers through the filling stations in tanks of less than 100 lbs.
This subsidy will be removed in January 2005 by which time the government expects to have a program in place to exclusively benefit the poor through propane subsidies.
The withdrawal of this official assistance is expected to eliminate the propane scarcity problems that have affected the country in recent months. A shipment of propane gas is expected to eliminate the shortage latter this week.
The immediate elimination of the subsidy to businesses is expected to bring monthly savings of RD$176 million to the government, given that the commercial and industrial sector consumes 22% of the LPG.