By Elias Hazou ENERGY Minister Giorgos Lakkotrypis, who has been taking flak from a section of the media for the unabated ‘rockets and feathers’ effect in fuel prices, has decided to convene a meeting for Friday to discuss the issue.
The meeting will be attended by the attorney-general and consumers rights groups, among others.
A little over a week ago, crude climbed from $45 per barrel to near $50; almost overnight, gas stations here jacked up their prices by 10 cents a litre. By contrast, drops in crude oil typically take weeks to translate into lower prices at the pump.
Giorgos Stylianou, of the Cyprus Consumers Association, said on Monday there is an urgent need to revise importers’ pricing formula so that consumers can immediately benefit from reductions in crude.
“People are at the mercy of the oil companies,” he told state broadcaster CyBC. Stylianou cited the auditor-general’s 2013 report, where the official had flagged the way importers’ margins are calculated. Currently, it is understood, the ‘reasonable profit margin’ is declared every year by each of the companies, and the government goes along with whatever figures the companies cite.
The auditor-general recommended instead that the profit margin be determined by a government-appointed panel, which will study in detail the companies’ expenses (fuel plus operating costs) and derive an appropriate profit margin.
He had gone on to note that “…though there may be an impression among the public that price checks [by the government] are satisfactory, in reality no substantive checks are carried out.”
“We are not the market police to interfere with fuel prices,” Loukia Christodoulou, head of the Commission for the Protection of Competition (CPC), said when asked to comment by the CyBC.
In mid-January, the CPC launched a sector-wide probe to determine possible market distortions. The probe is not directed at any particular fuel wholesaler or retailer. The probe would take time, Christodoulou said. Currently, detailed questionnaires have been sent out to gas stations as well as importers, and the CPC was waiting for their feedback.
In October last year, a consumer advocacy group accused the state and fuel companies of complicity in keeping fuel pump prices high, which ostensibly enabled the government to collect more in taxes and greedy corporations to rake in the profits. Pump prices started falling shortly after.