2004News

Subsidized propane being diverted

According to Hoy’s economic editor Mario Mendez, subsidized propane gas is being diverted to industrial consumers, a breach of the new system that represents a RD$100-million loss in tax revenues for the government. Mendez writes that, according to sources, this “waylaying” of subsidized propane provides huge earnings for the gas wholesalers. The sources also informed him that in September the various purveyors of propane distributed 22,468,331 gallons of the gas, but just 11.64% was reported to have been sent to industrial users. Mendez says that industrial use of propane is significantly higher, while Aristedes Fernandez Zucco said that industrial consumption represents about 20% of the market and yet others believe the figure to be closer to 30% of the market. If the true industrial consumption of propane were 20%, the illegal earnings of the distributors and the subsequent the loss to the government treasury would stand at RD$56.3 million. This amount is arrived at by multiplying the price difference between the subsidized gas and non-subsidized gas (currently RD$30) by the 8.36% of gas that is diverted to the industrial sector but attributed to have been sold in the domestic sector, (1,878,352 gallons). If the true consumption figure were to be closer to 30% of the market, then the illegal earnings and the tax evasion would ascend to RD$123.7 million. It is interesting to note that the Dominican Refinery says that they dispatched only 3.57% of propane to industrial users and Mundogas sent out only 6.39%, but Coastal sent out 22.98% to industrial users.