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Lower oil prices and higher living standards

Article - October 17, 2011
ALBA Petroleos is changing the petroleum industry in El Salvador by bringing
fairer oil prices and social benefits
In 2006, 20 municipal mayors belonging to the incumbent left-wing Farabundo Marti National Liberation Front (FMLN) party came together to form the Inter-Municipal Association of Energy for El Salvador (ENEPASA) and signed an agreement with PDV Caribe, a subsidiary of Venezuela’s state-owned oil company PDVSA.

The new company – ALBA Petroleos de El Salvador – is the first time the Venezuelan government has formed a joint venture with representatives of local governments rather than with a national government or private enterprise. From its inception, the project has been designed to foster El Salvador’s development not only politically through regional alliances, but also economically, culturally and socially.

The entry of ALBA Petroleos into the market has been seen as a first step toward “de-privatizing” oil imports, as the commercialization of imported oil used to be firmly in the hands of private multinationals. “Since our arrival in December 2007, we have generated high expectations because our goal was to establish a fairer price for oil for Salvadorans by revealing the full market chain from beginning to end,” says Dr. Luz Estrella Rodriguez, vice president of ALBA Petroleos and Mayor of Apopa. “In establishing a fair price for oil, the competition had to match our prices and our transparency regarding tax contributions to the state.”

In May, the company opened its newly built storage plant capable of storing 350,000 barrels of fuel in Acajutla. It is also is preparing its imminent entry into the Salvadoran propane gas market.

Dr. Rodriguez says, “ALBA Petroleos’ power plant was designed to the highest quality standards. Venezuelans, with their extensive experience in the field, ensured that this is one of the best plants in Latin America, complying with all international standards and safety precautions, including ISO 14000 standards, which address various aspects of environmental management.”

“Of the $115-million invested in the plant, 3% went directly to the neediest of communities,” she adds. “Our company has a social purpose. We put $3.6 million directly into street, water and energy projects around the plant.”

ALBA Petroleos has a 100% Salvadoran workforce that benefits from comprehensive training schemes. It is also behind various agricultural projects helping rural communities, as well as new schools and health clinics.