The Fuel Prices Stabilization Mechanism (MEPCO) was created in the Law Nº 20.765, published July 9th, 2014.
On a weekly basis, the Macroeconomic Policy Division of the Ministry of Finance determines the variable component (CV), which is added to the Specific Excise Tax (IEC). The CV is set so that it simultaneously meets two restrictions: i) that the weekly change in the “Wholesale Price”, determined by ENAP, is not greater than 0.12 UTM per cubic meter and ii) that the import parity price, calculated by the National Energy Commission (CNE) plus the CV of the IEC is within the reference band of the fuel price calculated by the CNE. Therefore, the CV can be positive (tax), negative (subsidy) or have a value of zero.
The objective of this component is to increase or decrease the IEC, affecting the wholesale price of gasoline and, as a result, reducing the volatility that these have due to the dependence on prices that are determined in international markets (oil prices, refined products, import costs and exchange rate).
The weekly report, the decrees and the regulations of the MEPCO can be found in the corresponding section of the website.