Costa Rica’s Recope calls out regulatory restrictions

Costa Rica’s state fuel company Recope faces the challenge of having to operate within a “complex and diverse” regulatory environment.

So reads the operator’s just approved strategic plan, which highlights the difficulty of working toward high levels of efficiency and competitiveness while restricted by a public framework that “privileges control.”

“These restrictions are preventing the company from paying competitive salaries ... and the caps on public spending create limits to the investment that the company can make annually,” according to Recope.

The company argues that these limitations are making it difficult for it to fulfill corporate governance guidelines established by the OECD, which Costa Rica joined in 2020.

In its 2022 report, also released this month, Recope points to “a delay of more than 10 years in maintenance and investment programs aimed at guaranteeing the security and continuity of the operation of the public service.”

The strategic plan, which lays out objectives to 2026, is available here and the annual report at this link, and in the Documents box in the upper right-hand corner.

As part of actions to improve efficiency, the operator previously shelved the project to build a Pacific terminal and ordered the dismantling of its shuttered refinery.

Fitch recently maintained Recope’s risk rating at ‘AA+(cri)’ with a stable outlook due to a low business risk profile on account of its fuel import and distribution monopoly, and solid financials.

The national fuel system consists of tanks and spheres with capacity to store 4.2Mb, four depots, two pumping stations, a 415km multi-product pipeline which connects both coasts, and facilities at the country’s four international airports.