Two-tier fuel pricing model reintroduced

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STA, June 15, 2022 – Prime Minister Robert Golob on Wednesday presented the government’s first measure to tackle the cost of living crisis, announcing a return to a model where fuel retailer price margins at service stations in outside the motorways are regulated while the prices of fuels sold along the motorways will be liberalized. The new regime will come into effect for one year on June 21.

Oil prices have risen from 70 euros a ton a year and a half ago to more than 120 euros, which has not been fully reflected in retail prices, Golob said, adding that Slovenia has plans different prices during this period.

“We had a regime that forcibly introduced retail price regulation. That’s why we now have millions [of euros] value of damage claims [from fuel retailers]. This diet is completely unsustainable,” Golob said.

“Off the highways, the market is unfortunately not functioning. All suppliers have almost identical prices all the time. If the market is not functioning, a return to regulation of retailer margins makes sense,” he said. he declares.

The government sought to find a balance between market prices where “each of us, the state, traders and consumers, bears part of the burden”.

Under the new model, fuel prices would be similar to those in Croatia, but lower than those in Austria or Italy. Given Tuesday’s stock market prices, regular gasoline sold off the highway could rise to just over 1.70 euros per liter and on the highway up to 20% and more.

“We looked at how much our consumers can bear,” Golob said.

The previous government reintroduced motor fuel price regulation in May, less than two weeks after lifting previous price caps. Since May 11, the maximum selling price has been set at 1,560 euros per liter for ordinary and 1,668 euros per liter for diesel. Wholesale prices were also capped.

Golob said the government’s position was that oil companies’ claims to be reimbursed for damages resulting from being forced to sell at lower prices were unjustified, but added that more would be clear after meetings with them.

Economy Minister Matjaž Han said the government needed to act quickly because fuel prices were affecting everyone and current regulations were causing the state a major deficit that potential refunds to retailers could run into the hundreds million euros by the end of the year.

The government will also present mitigation measures on July 1, which it plans to adopt next week. Golob mentioned a 16% increase in the pre-tax amount of travel expense reimbursement, an increase in excise duty reimbursement for public passenger transport providers and relief for farmers.

Working with transporters, the government will start looking for solutions to prevent fuel price hikes from spilling over into higher prices for food and other basic commodities.

Measures to fight against the rise in food prices should follow in June and those to deal with the rise in the cost of electricity and heating in the first half of July.

“There is enough time to act. These measures will also follow the same principle as for petroleum products, i.e. predictability for all stakeholders,” Golob said.

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