What are the numbers that complicate the extension of the biofuels law

The biofuels lobby has succeeded in securing nearly a hundred bills to await processing in Congress to support the tax benefits of their production, which has cost the state over 7,400 over the past 15 years. millions of dollars. At Casa Rosada they recognize that biofuels have become a big deal on tax accounts and these days they are debating how to channel the issue: the executive could drop the program, expand it, or send a new one. project in Congress which rearms the scene.

In May, the regime of certain tax benefits for biofuels will expire, not their use or their obligation to reduce gasoline and diesel. The use of 10% biodiesel in every liter of diesel and 12% bioethanol in the liter of gasoline will not cease to be required. Not even the tax benefit of not paying fuel tax, because this favor has also been protected since 2018 by Law 23966 on fuel taxes.

If government opposition to extending the current regime is maintained, biofuel companies would lose the possibility of early VAT refund or accelerated income tax write-off for new factories built. . In addition, they would stop having a state-regulated pricing system and the granting of discretionary quotas that the Department of Energy allocates monthly for each plant. They must compete freely, for price and quality, between all the producers in the market.

In May, the regime of certain tax benefits for biofuels will expire, not their use or their obligation to reduce gasoline and diesel

Some lawmakers worried about the lack of definition, especially in the province of Cordoba, have recognized that President Alberto Fernández warned them that the system launched in 2006 will have to be redesigned, when a barrel of oil traded above $ 100. and fuels made from soybeans, corn and sugar have made it possible to dream of a significant drop in prices at service stations.

“The development of biofuels around the world has been driven by the geopolitical needs of the United States and the European Union to break out of their dependence on oil,” he says. Martin bronstein, president of the Center for Energy, Politics and Society Studies (Ceepys).

“In 2006, almost 70% of crude exports came from OPEC and the United States imported more than 60% of what it consumed. It was a matter of national security for these countries to develop alternatives to oil, ”explained Bronstein.

Soon after, the United States found the largest reserve of unconventional oil in the world and stopped relying on third countries, the price of crude oil stabilized on the downside, agricultural commodities rose and the dream of agricultural fuels has collapsed.

But in Argentina, the program was maintained and even intensified, gradually increasing the mandatory percentages with which biofuels had to be mixed with those obtained from petroleum.

If the scheme is not extended, biofuel producers will lose the prepayment of VAT, accelerated depreciation of income tax on new factories built, and the state-regulated price system. They must compete freely, for price and quality, between all the producers on the market

“Over those 15 years, the cost of biofuels has been consistently higher than that of fossil fuels, which has translated into higher fuel costs at the pump,” he said. Nicolas arceo, former vice president of administration and finance of YPF and current director of the consultancy firm Economía & Energía.

This higher cost of biofuels was partially offset by the exemption from the tax on liquid fuels, which “generated a reduction in tax revenue for both the Nation and the provinces, because it is a tax that can be shared. “, he said.

According to Arceo, in 15 years, the current tax promotion regime for agrofuels has recorded a tax debit of US $ 6,000 million due to a decrease in tax collection and a loss of foreign exchange of $ 1,400 million. EU for soybean oil and corn which have ceased to be exported. (and therefore to pay withholding taxes) to be put back on the domestic market.

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