$759 million subsidies a gas-tank packer bonanza

The two companies that package the  25-pound gas tanks use in scores of thousands of Panama homes have a growing featherbedded business to which the State has allocated $759 million in subsidies in the last 9 years, assistance that is not focused on Panamanians with least resources.

Calculations indicate that of the one million families that use it, a third really needs the support of the State says a La Prensa report.

The historical distortions that have dominated the sale of  25-pound gas tanks, subsidized by the State, now extend to the field of distribution says  La Prensa.

There are two companies that pack the product: Panagas and Tropigas, whose sales chain s extended to another 24 transport and logistics companies that distribute the cylinders in stores or grocery stores, where consumers pick up and carry.

It is these distribution companies that now demand higher profit margins and they have threatened to suspend delivery unless they are paid more for each cylinder shipped.

Distributors warned that the increase in operating costs, mainly due to the increase in the workforce, affects its profitability.

That’s when they decided to knock on the door of the companies that pack the product to ask for more pay. Tropigas and Panagas said that was impossible because their income would also be affected.

The problem then moved to the State, as the 25-pound tank is subsidized and the price is controlled.

The solution for distributors is for the State to assume, through more subsidies, its operating costs. But the subsidy was not created for that purpose, but to make the gas cheaper for the consumer.

Petroport and Chevron, are the importers of the gas and receive the state subsidy that is then transferred, to the rest of the chain.

Tropigas and Panagas pack the gas into cylinders and the distributors dispatch them to the

grocery stores,  where it is available to the end customer.

When the price of gas arriving in Panama increases, what varies upwards is the subsidy and not the price at which consumers buy.

Distributors are demanding that the price increase by  75 cents per cylinder, 18% over the current price.

The actual price of the 25- pound tank is $12.87, but to offer the product at an accessible price

the State subsidizes $8.50 and the consumer pays $ 4.37.

The recipe represents a safe bonanza for importing and packaging companies.

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