SANTIAGO, June 11 (Reuters) - Chile's government will look to cap fuel price rises to protect consumers from volatility, replacing an existing scheme that has been criticized for not doing enough, Finance Minister Alberto Arenas said on Wednesday.
The so-called MEPCO fuel-price stabilization mechanism would put a cap of 20 Chilean pesos ($0.04) per liter per month on how much prices can fluctuate and would replace the current subsidy system in place since 2011.
Top copper exporter Chile imports nearly all the fuel it consumes.
The new instrument "effectively protects consumers by, among other things, limiting price increases to no more than five pesos per week," Arenas told reporters. The bill will go to Congress later this month, he added.
Though the new mechanism would limit price variations, it would not seriously alter long-term prices or impact inflation, the Finance Minister's advisors said.
Inflation in Chile has recently surged past the central bank's 2 to 4 percent tolerance range to an over-five-year high, as the peso has weakened versus the U.S. dollar.
Since center-left President Michelle Bachelet took office in March her government has pursued a battery of measures aiming to overcome income inequality in Chile.
$1 = 554.50 Chilean Pesos Reporting by Felipe Iturrieta; Writing by Anthony Esposito; Editing by Meredith Mazzilli