As soon as possible, AKEL will seek to lead the plenary session of the Parliament, the law proposal submitted by the party's General Secretary Stefanos Stefanou on the possibility of imposing a cap on fuel prices.
At the same time, the law proposal adopts the justification contained in the government bill, which provides for the setting of maximum wholesale and retail prices for basic goods (bread, milk, electricity, Cypriot coffee, barley and corn), which was also presented today to the House Commerce Committee.
At today's meeting of the Parliamentary Trade Committee, Mr. Stephanou explained that the proposed law enables the Minister of Energy to impose a cap on fuel prices in cases where particularly difficult economic conditions prevail in the market, which require the restraint of price increases to protect consumers.
As he said, the existing legislation limits the possibility of imposing a cap only in the case of obscenity, while its effect is left to the discretion of the Minister.
At the same time, Stefanou said that while discussing his proposed law with Finance Minister Constantinos Petrides yesterday, the Minister expressed his agreement with it.
A spokesman for the Ministry of Finance told the Energy Committee thatthe Ministry does not have strong views on the proposed law to set a cap that already exists in existing legislation but asked that the method of implementation be taken into account. He also expressed his agreement with the government's bill to impose a cap on basic goods.
However, the Director of the Ministry of Energy's Consumer Protection Service, Konstantinos Karagiorgis, expressed concern about the possibility of tactical intervention in the market and the impact this would have.
Stefanou countered that intervention in the market would be after intervention by the competent authority of the Ministry. We are not, he noted, removing the Minister's ability to decide when to intervene, we are simply giving her an additional tool. He also expressed the view that fuel should be included in the law on the cap on basic goods.
Up to 180% increase in fuel purchase prices at refineries
Describing the situation in the market, Mr. Karagiorgis said that the prices as bought from the refineries by the companies with the conversion into euros have increased since last June by 118% for 95 petrol, 180% for diesel and 159% for heating oil. On the contrary, he said crude oil had increased by 73% so this increase is not consistent with the prices bought by the companies. He said if a cap is set for a particular period and there continues to be a price increase the only thing that will be created is an immediate problem in the availability of fuel.
At the same time he said that the department is modernizing the methodology for monitoring prices and if and when there is a profit margin that deviates significantly from what it should be then there is an investigation.
The relevant department of the Ministry of Energy also came under intense pressure from MPs to provide more data especially with regard to the rate of This issue was raised by Stefanou stating that they are not satisfied with the answers given to them.
The Chairman of the Committee and DISY MP Kyriakos Hatzigiannis asked for both the way the profit rate is calculated and the CV of the consultant who prepared the methodology for the control of fuel prices, which the department has not given them so far.
The Trade Service explained that what is calculated is not the profit margin but an expected fuel price that is compared to the actual fuel price and how much is the acceptable deviation.
The MP for the Green Movement Stavros Papadouris questioned whether the service does not include the profit margin to calculate the actual price. "If you want to avoid answering what the profit margin is, tell us clearly," he said. At the same time he said that Cyprus is not currently a healthy market and the state does not give citizens alternatives so that they are not dependent on fuel.
On behalf of the Competition Protection Authority there was an admission that a profit margin is definitely included, however this is confidential. He also said he would come back on the issue and whether he could enlighten MPs further.
Asked by Mr Hatzigiannis to the Legal Service whether petroleum products could be included in the Essential Goods Act, a spokeswoman for the Service replied that she saw no reason why this could not be done, if technically justified.
A representative of the Competition Protection Commission expressed concern and worries about the practice of applying caps on markets in the light of competition, since there may be problems in the functioning of the market, such as shortages, the phenomenon of black markets, the failure of companies to cover their costs, etc.a.
It also said that an appeal against the annulment of the NPC's decision on oil companies is before the Supreme Court and the decision is awaited.
The KEBE also expressed concern about possible shortages in the market if a cap is imposed and requested that if a cap is imposed, it should be on the percentage of profit and not on the price.
In the same vein, a representative of the OEB said that setting a cap on prices is very dangerous and added that petroleum products is the only sector that is so heavily controlled in Cyprus.
The Association of Petrol Station Owners called for a cap on wholesale fuel prices first and then on retail prices, and said that they face a problem of unhealthy competition with the companies' privately owned petrol stations.
In their statements, representatives of the companies insisted that the problem is exogenous, while they expressed no particular disagreement with the proposed law.
Nikos Achildis[/B], on behalf of Staroil, also referred to the strong competition they face from the occupied territories.
George Gregoras[/B] on behalf of Hellenic Petroleum noted that theirs is the most controlled sector in Cyprus, more than any other European country and it is controlled in great detail by the competent Ministry.
Costas Tsigaras[/B] on behalf of Shell said that those who talk about obscenity should say at what point in the fuel marketing this takes place, while he said that there is practically no profit rate but it is calculated at a cent per litre.
Petrolina's CEO Dinos Lefkaritis said his company has 5-6 million a year in published profits with a 2% profit not only from fuel sales but also in other ways. He said things are not that simple and accused the companies of being thieves. He added that everyone should understand that the problem is global. He said he is not against the proposed law, but there might be pressure on the market.
Hatzigiannis[/B] said after the committee that capping prices means interfering with the way the market works with too many risks and the possibility of leading to the opposite result from what the two legislations want.
He added that capping the profitability of companies for a minimum period does not affect the functioning of the market at all, but only seeks through the tax instrument to prevent over-profitability. However, he said, it should be defined what profitability means because there is a risk of penalising the principle of profitability as a market creation tool and having a negative impact on innovation or the successful activity of a company. "We favour that the cap should be limited to obscenity for the period of war on energy issues," he said."
In his statement to the committee, DISY MP Marios Mavridis asked what would happen if the supply of fuel in the economy is reduced by the imposition of a cap and whether it would benefit the importer. As he said "why did AKEL not think of making a company import oil if it is so profitable". He added that he has no problem with the state intervening in the market if and when necessary, but he has a problem with intervening after political pressure because, he said, if these tools are introduced, political pressure will also be introduced. He also noted that from the moment the oil is produced until it reaches the consumer, 4 and 6 weeks pass and that the reductions that have taken place internationally will be seen afterwards.
AKEL MP Costas Costa told the Committee that there is obscenity and that what is happening is unacceptable. He also said that he did not refute anything he had said in plenary about companies ripping people off and said he had evidence from petrol station owners that prices from 26 February to 26 May did not fall in Cyprus despite the international reduction. He also said that in April 2022 the profit margin of a particular company shot up
In his statement after the Committee, DIKO MP Panicos Leonidou expressed the view that both proposals can be beneficial in this difficult economic situation.
He also expressed surprise at the reluctance of the Consumer Protection Service of the relevant ministry to agree to the proposed law regarding the cap on fuel, raising, he said, various obstacles to classifying petroleum products as necessities.
EPP MP Elias Mirianthous said that the EPP fully agrees with both proposals and that the cap on fuel should be in the same logic as the cap on basic goods. He expressed the view that it is a matter of political decision on how the government should handle the whole issue in order to find the golden mean.
The MP of the PPP Cooperation, Michalis Yiakoumis said in his statements that these tools should be given to the Minister of Energy so that she can use them and impose what is necessary because households can no longer afford them. As he said especially in fuel and essentials must give the answers to the Ministry of Energy, the Ministry of Finance, the Government in general.
Source: CNA
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