Ecuadorian Seiner Owners Hint On Moving Fleets To Panama
Tuna vessel owners in Ecuador are inquiring about the possibility of moving their operations to Panama because of cheaper oil prices, following the increase of diesel rates set by the Ecuadorian government.
Current price stands at USD 1.80 per gallon, almost 80 cents more than the previous rate. Manta Chamber of Commerce President Lucia Fernandez said that costs of other goods, services, supplies and equipment also surged on top of the oil price. To compare, diesel prices today are at USD 2.22 per gallon in the USA.
If fleets moved to Panama, the two main tuna hubs in Posorja and Manta will most likely be hit, according to reports by Ecuadorian media. Two major tuna plants based in Posorja (NIRSA and Salica del Ecuador) employ most of the locals in the factories as cleaners or operators or as crew members of the extensive fleet of 115 vessels nationwide.
However, in spite of playing with this idea of a possible fleet migration, seiners will still continue to land their catch in Manta, Posorja and Guayaquil, since these are their major volume customers. There is also no factory in Panama to support canning operations, at most the port could be used as a transshipment port into carriers, adding additional logistic charges.
In September 2018, the Ecuadorian government announced a cut to diesel subsidies in order to increase oil production and offset fiscal deficit. Diesel is one of the main exports of the cash-strapped country.
Alongside subsidy cuts, the government also borrowed more than USD 1.1 billion to raise oil production in the country. Earlier this year, authorities discussed a compensation scheme to replace diesel subsidies.
The prospect of an Ecuadorian fleet exodus to Panama aims to add pressure to the national government to lower the oil prices and reinstate fuel subsidies. Oil remains to be the major expenditure for any tuna fishing operation.