Commercial Relations

Commercial Policy

The country’s authorities have recognized the import parity criterion as valid for the Chilean market and have indicated that, because its commercial policy is based on competition, which in fact is originated by fuels importers and by the international benchmark prices.

Consequently, any contractual formula established between ENAP and its customers - the distributor companies - does not affect internal fuel prices in Chile since, within a context of import parity prices these are governed by the external markets.

ENAP maintains supply contracts with the distribution companies, by which such companies freely undertake the annual volumes to be bought, thus enabling ENAP to program in advance its crude purchases and refining processes, in order to supply the fuels ordered, making the refining process and logistical programming more efficient.

Pricing Formula

This pricing formula applies to fuels, diesel and kerosene.

ENAP updates its prices every Thursday. A “week” is therefore the period of seven days starting on Thursday of a calendar week and ending on the Wednesday of the following calendar week.

The calculation formula for these prices is the following:

PM (t) = PI(t) + FEPC(t) + IVA + IE

Where :

PM (t) = Price to wholesale distributors in week “t”, with taxes, in Ch$/m3
PI (t) = Import parity price Concón in week “t” = International price for the product placed in Concón, Chile [includes: FOB price in U.S. benchmark market.(*), cost of sea freight Corpus Christi (Texas)- Quintero, insurance, customs duty (currently zero for products of USA origin), other minor import costs and cost of logistics for the reception at Quintero and transportation to Concón] (**).

IE = Specific tax (fixed, in UTM/m3) 6 UTM/m3 (fuels) 1.5 UTM/m3 (diesel)
IVA = Value Added Tax
FEPC (t) = Oil Prices Stabilization Fund, Law 20,115, applicable to week “t”. It considers FC (FEPC credit), FI (FEPC tax) values, or zero.

When the FEPC grants credit (subsidy) in FC $/m3:
PM (t) = PI(t) – FC(t) + IVA + IE where IVA = (PI – FC) x 19%
When the FEPC applies a tax of FI $/m3:
PM (t) = PI(t) + FI(t) + IVA + IE where IVA = PI x 19%

(*) Average of the business days of weeks “t-3” and “t-2”.
(**) Converted from US$/m3 to Ch$/m3 using the exchange rate on the Tuesday prior to the day the prices are effective, which is the Thursday of each week. If the PI in Ch$ thus calculated varies by less than 0.5% with respect to the current PI in Ch$, it is not modified, thus remaining in effect for another week. This is in order not to introduce excessive volatility in prices by incorporating non significant fluctuations in the international market.