September 24, 2018 / 6:11 PM / 21 days ago

New Venezuela fuel payment system gets off to slow start

CARACAS (Reuters) - Venezuela’s new digital fuel payment system got off to a slow start on Monday, as most drivers paid with cash and only a handful of gas stations were equipped with the system that President Nicolas Maduro says will limit fuel smuggling.

A worker shows the device of the Venezuela's new digital fuel payment system at a gas station of the Venezuelan state-owned oil company PDVSA in Caracas, Venezuela September 24, 2018. REUTERS/Marco Bello

The new system entails Venezuelans applying for and using a state-backed digital identification document to pay for fuel, with the government providing gas stations with wireless devices that will read the card.

Leftist Maduro has said the system will limit the cross-border trading of gas, which is so heavily subsidized that drivers often do not even bother paying for it. Last week, he said the new payment system would roll out on Monday.

A gas station worker counts Venezuelan bolivar notes at a gas station of the Venezuelan state-owned oil company PDVSA in Caracas, Venezuela September 24, 2018. REUTERS/Marco Bello

That followed a pilot earlier this month in border states, where fuel smugglers are the most active, though drivers at the time said the system was not functioning.

Gas station employees and drivers that Reuters spoke to on Monday said the system was not fully operational.

“Right now payments aren’t being made with the system, it’s only to show how it works,” said an employee of a gas station in Caracas, who asked not to be identified. “This is a test phase, it’s a month-long test.”

The Information Ministry did not immediately reply to a request for comment.

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Maduro has said gasoline prices will rise to international levels by October, but has provided no details on what the prices would be. The issue has been politically delicate since a 1989 austerity package that included a fuel price hike triggered rioting that left thousands dead.

Maduro’s previous plans to raise gasoline prices have either been abandoned or resulted in insignificant increases that were quickly overtaken by inflation.

Many Venezuelans Reuters spoke to said they were confused about what the new prices will be and called the card a mechanism to withhold benefits and services from those who oppose Maduro.

“To me this system is garbage,” said Mercedes Fernandez, 41, a systems engineer. “We don’t even know how much it’s going to cost, or how we’re going to pay.”

Fernandez shortly thereafter filled her tank and paid for the fuel with a bank note worth 0.01 bolivars, currently the smallest denomination of legal tender.

The combination of fixed fuel prices and annual inflation now topping 200,000 percent has made gasoline so cheap as to be effectively free. For the amount it costs to buy one kilo (2.2 pounds) of cheese, a driver could fill their tank 20,000 times.

Reporting by Shaylim Castro, Writing by Brian Ellsworth, Editing by Rosalba O'Brien

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