April 13, 2018 / 4:23 PM / 9 months ago

Mexico's energy minister rejects candidate's call for fuel price freeze

MEXICO CITY, April 13 (Reuters) - Mexico’s energy minister on Friday rejected calls by the frontrunner in the country’s upcoming presidential race to freeze gasoline prices, saying the government must find better ways to avoid price spikes.

Leftist presidential hopeful Andres Manuel Lopez Obrador, who is leading most polls by double digits ahead of the July 1 vote, said this week he would mandate a three-year fuel price freeze if elected.

While a promise to fix gasoline and diesel prices might seem attractive, consequences of such a government-mandated policy would be unpredictable, said Energy Minister Pedro Joaquin Coldwell at an event in the capital.

“It’s easy to freeze but, on the other hand, the challenge is how you unfreeze,” he said. “When you unfreeze, buckle your seat belts because prices are going to jump.”

Mexico, which has over the past couple years gradually ended a policy of government-set gasoline prices, was rocked by protests early last year after a double-digit increase.

The so-called “gasolinazo,” which officials defended at the time as a necessary measure to end costly fuel subsidies, helped sink President Enrique Pena Nieto’s approval rating to historic lows.

The liberalization of fuel prices in Mexico is part of a landmark energy reform finalized in 2014.

The energy minister said the government should instead find ways to make prices for motor fuels, as well as electricity rates, as low as possible through what he described as “technology and competence.”

The longtime politician whose family also owns several Pemex gas stations said the finance ministry’s current policy of weekly adjustments to a key tax applied to fuel sales is a better way to keep volatile prices swings at bay.

“That permits you to cushion the volatility without the need to manipulate the market,” he said. (Reporting by Adriana Barrera; Writing by Julia Love; Editing by David Alire Garcia and David Gregorio)

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