OREANDA-NEWS. February 06, 2017. Mexico's government will keep maximum gasoline and diesel prices at their current levels until 17 February, scrapping plans to update prices tomorrow and on 11 February amid protests from consumers.

Protests began on 1 January, after the government introduced a new pricing formula that led fuel prices to rise by up to 20pc.

The finance ministry was scheduled to update its pricing formula tomorrow and again on 11 February, but said today in a press release that prices would remain the same until 17 February.

"If we were updating the formula we used in January as it is ... we would have had to increase fuel prices," deputy finance secretary Miguel Messmacher said in a radio interview today. "Obviously of a lesser magnitude that the one observed in January, but an increase."

Messmacher said that higher oil prices and a better exchange rate since January meant the government had greater oil revenues.

"So what we did, as we'd done in January, is to assess by how much we could soften the price, reducing slightly the tax rate via a fiscal stimulus, using this excess in revenues," Messmacher said.

Two taxes are included in the retail price of fuel, the VAT and the special tax on production and service (IEPS). Messmacher did not clearly specify which tax had been modified but it is more likely that the government took action through the IEPS, a tax highly criticized in the industry for being too high and preventing permit holders from beginning fuel imports.

In this first week of February, Messmacher says the price for 87-octane gasoline should have seen an increase of 0.7 pesos per liter.

Instead, however, the maximum price for a liter of 87-octane gasoline will remain at 15.99 pesos/l (\\$0.78/l), the 93-octane grade at 17.79 pesos/l, and 17.05 pesos/l for diesel.

The new pricing formula introduced on 1 January includes different maximum prices set for 90 regions throughout the country, to better reflect logistical costs, international reference prices and commercial margins for fuel retail stations.

Beginning on 18 February, prices will be updated daily, until market-driven prices are implemented on a rolling basis throughout the country by December.

Messmacher said today that as long as the government's finances would allow it, and until market-driven prices are gradually introduced, the finance ministry would keep edging off prices if need be.

The finance ministry in an earlier press release attributed various factors as having contributed to keep prices level — austerity measures already taken by the government, a better exchange rate than expected, and the positive evolution of the international price of gasoline.

The changes are part of Mexico's fuel market liberalization, which began with the country's sweeping energy reform that ended Pemex's downstream monopoly in 2014.