Government Weighs 1-2 Month Extension of $177.5M Transport Fuel Compensation Program

The Decision Point

Minister of Government Nataly Morillo confirmed the executive is evaluating extending the transport fuel-subsidy compensation under Decreto Ejecutivo 306, per Primicias (source):

Tariff-Setting Posture

Morillo drew a hard line on rates:

"Las tarifas tienen que hablarlas con los GAD, no es con el Gobierno Nacional."

Translation: passenger fare adjustments are the jurisdiction of municipal governments (GADs), not the national executive. This limits the national government's ability to trade tariff increases for subsidy reductions.

Background — Decreto Ejecutivo 306

Signed June 25, 2024 by President Noboa, Decreto 306 established the economic compensation framework for transporters affected by fuel-subsidy reform. Roughly 84,000 transporters nationally fall within Decreto 306's scope, though ongoing adjustments have narrowed who currently receives payment (about 35% of Azuay's 3,612 registered taxis no longer receive compensation, per recent reporting in Cuenca).

Fiscal Scale

• $177.5M disbursed to 57,000 transporters = **$3,114 per transporter average**
• If extended 1-2 months at similar rate, incremental cost: ~$88M per month (approximate)
• Total program cost through April + proposed extension: potentially $265-353M range

What to Watch

• Formal decision — extension versus sunset. A sunset without extension transmits directly into transporter cash flow and potential service disruption threats (especially in provinces like Azuay where taxi unions have already signaled frustration).
• Fiscal offset — how the extension is funded: reallocation from other ministries, supplementary budget, or drawdown against reserves/IMF facilities.
• GAD tariff negotiations — with the national government insulating itself from rate-setting, municipal governments in Quito, Guayaquil, and Cuenca become the venue for passenger-fare politics.
• Labor-management in transport unions — FENACOTAXIS, Frente Unido de Taxistas, and regional cooperative federations are the counterparties that will shape compliance if the extension is denied.
• Knock-on price effects — fuel price passthrough to transport fares ultimately affects CPI via food and intermediate goods logistics costs. Watch INEC inflation reports for the May-June window.

Source: Primicias