Page 17 - EurOil Week 26 2022

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statement. coalition’s leaders (including Ciuca) previously The Commission is concerned that
In line with the decree, fuel retailers are ruled out cutting the VAT as not guaranteeing the proposed transaction may reduce
obliged to apply the determined retail prices a sustainable drop in the end-user price. The competition in the retail motor fuel market.
immediately after the official publication on same issue exists in the case of the RON 0.5 “We need to carefully assess whether
the ministry’s website. subsidy, though there’s no guarantee that the the changes in the competitive landscape
end-user price will drop compared to some prompted by the proposed acquisition
benchmark. would have an impact on prices or the
Romania announces opposition party USR have criticised PM quality of services,” Margrethe Vestager,
The Social Democrat party PSD and the
Executive-VP responsible for competition
temporary subsidy scheme Ciuca’s decision on mitigating the rising fuel policy said.
The Commission’s preliminary
prices.
for car fuel prices but we still believe that the Social Democrats’ investigation shows that MOL and OMV
“We respect the prime minister’s decision,
Slovenia compete head-to-head in many
The government of Romania will pay car alternative [capping the margins along the areas, thus the transaction would thus
fuel distribution companies a fixed subsidy distribution chain] would have been better remove the main competitive constraints for
of RON0.5 (€0.1) per litre of petrol and and would have led to results much closer MOL and market leader Petrol.
diesel, under a three-month scheme aimed to Romanians’ expectations. In addition, Entry costs to the market, regulatory
at mitigating the high fuel prices, announced in many other European countries, the barriers and a scarcity of attractive locations
Prime Minister Nicolae Ciuca. compensation solution worked for only a few also hinder market competition in the short
Consequently, the end-user price will weeks, after which the prices returned and to medium term, it argued. The European
decrease by 0.5 RON per litre (some 5.5% for reached even higher levels,” PSD said in a post Commission has until October 28 to take a
current prices), PM Ciuca said. on Facebook. decision on the matter.
The scheme is expected to cost some However, a mechanism to cap the margins MOL announced in June its deal to buy
RON2bn (€400mn), out of which the along the distribution chain – although OMV’s retail network of 120 service stations
government will cover half, PM Ciuca said – in principle better compared to the fixed in Slovenia. The Hungarian company
leaving the other half in limbo. subsidy solution – would be rather complex to offered €301mn for 92.5% of the stakes
The RON0.5 subsidy is a move apparently implement and may require permits from the in the company, in which its Croatian
decided by PM Ciuca as his own last-minute European Commission. subsidiary INA already holds 7.5%. MOL
solution after the ruling partners failed to The compensation of RON0.5 established decided not to submit commitments during
agree on a more sophisticated mechanism, by the government is a “pseudo-solution that the initial investigation to address the EC’s
like the one reportedly suggested by Finance does not help anyone”, according to reformist preliminary concerns.
Minister Adrian Caciu involving capped party USR, which pleads instead for the MOL entered the Slovenian market in
margins (a cost-plus mechanism) along the reduction of VAT on fuels – which in principle 1996 with the aim of establishing a retail
entire chain of distribution, or the VAT rate is again a feasible model for the government network and wholesale operation. Over
cut suggested by reformist party USR. to consider. “The USR proposal to reduce the the years it grew organically and by taking
On the upside, the scheme is financially VAT from 19% to 5% would have reduced the over the TUS network in 2011 and Agip in
viable: The government is losing RON0.6 per price at the pump by more than RON 1 per 2016. At present, MOL Slovenija operates 53
litre only as VAT after the fuel price surged litre,” USR argues. service stations.
from RON6 (€1.2) to RON9 (€1.8) per litre In related news, MOL said that it is
over the past several months. producing at full capacity again at its
Furthermore, the government will cash MOL’s Slovenian acquisition Danube refinery near Budapest, nine days
some €100mn out of the €500mn special after a fire broke out at an atmospheric and
dividend agreed by the board of the country’s under EU scrutiny vacuum (AV) distillation unit. The other
main oil company OMV Petrom – an two AV units at the refinery operated at full
indication of the massive rise in the profits The European Commission opened an in- capacity.
derived by the oil companies from the current depth investigation to assess the planned
situation. acquisition of OMV Slovenija by Hungarian
On the downside, PM Ciuca hasn’t oil and gas company MOL, which is the
specified an explicit financing source for the third-biggest player on Slovenia’s motor
scheme. The implicit source seems to be the fuel market behind second place OMV
supplementary VAT revenues, but the ruling Slovenija.

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