CYPRUS: MPs and consumers claim pump price manipulation by companies

Petrol companies are accused of price manipulation as Cypriot motorists see fuel prices follow an upward trend despite a reduction in consumer tax.

Continuous increases in pump prices have been recorded over the past few months eradicating a six-cent decrease in consumer tax on petrol voted in by Cyprus MPs in December.

Motorists have seen prices at the pumps surpass those before the consumer tax reduction, while consumer groups and a number of MPs claim there is price collusion and profiteering at the expense of consumers.

After international oil prices fell, combined with the consumer tax cut, petrol at the pumps (95 Octanes) went down to EUR 1.05 per litre from 1.24 at the beginning of December 2018. Today 95 octane petrol is being sold at an average of Euros 1.25, as prices peak.

Cypriot consumers are paying significantly more for petrol than in mid-January, when fuel prices were at their lowest for the year.

Since then until May the retail price of petrol increased by 16.9 cents a litre, the price of diesel increased by 10.6 cents a litre and heating fuel by 10.9 cents a litre, according to data collected by the Cyprus Consumer Association.

According to the association, prices continuously climbed since January. In May, petrol increased by 1.4 cents, diesel by 2.1 cents and heating fuel 1.2 cents, compared to the previous month.

As a result of the May increase, consumers paid a total of Euros 36,945 more compared to April 2019. For 95-octane petrol, they paid Euros 15,997 more while for diesel fuel they paid Euros 20,948 more.

AKEL MP Costas Costa, a member of the House Energy Committee, said according to data presented before the committee by the Auditor General’s office, for every cent prices go up, companies make an extra annual profit of EUR 10 mln.

Meanwhile, the Commission for the Protection of Competition has on several occasions stated that there is no platform for healthy competition in the fuel market, said Costa.

Situation normal

He added that the Energy Ministry services keep stating that fuel prices are normal, insisting that there is no profiteering on behalf of the companies.

If this is so, why hasn’t the Energy Minister answered a simple question we have posed over and over again. How is it possible that just a few years back, when the price of crude oil was USD 140 a barrel, the price of 95 Octane petrol stood at Euros 1.40, while today the barrel stands at less than USD 65 and prices are around Euros 1.25? asked Costa.

Costa argued that while the authorities insist that prices are lower than the EU, Cyprus saw almost double the increase recorded in the EU during a two month period.

How can they put forward such arguments, when according to the ministry’s own data, petrol prices during the period 14 January to 18 March this year, increased by 4.4 cents on average in the EU and in Cyprus by 7.8, while diesel prices in the EU increased by 5.6 and in Cyprus by 7.4 cents.

Also worried about price manipulation, EDEK MP Elias Myrianthous said it was unacceptable that consumers are paying significantly more than they did in December when the House voted in a 6 cent reduction in taxes.

To me, there is clearly a manipulation of prices going on and the Energy Ministry needs to step in. However, it would appear that they prefer to look the other way as companies profiteer off our backs, said Myrianthous.

He added that the Energy Minister should act and impose a ceiling on prices.

Commenting on the ministry’s argument that prices are higher in other EU states, Myrianthous said that wages are also higher in those countries.

In the UK the price maybe GBP 1.29 (EUR 1.45) but wages are much higher.

Green MP Charalambos Theopemptou said the state is encouraging the use of vehicles powered by conventional fuel, instead of promoting the use of natural gas and alternative energy powered vehicles.

While the state has given citizens incentives to buy new cars, there are no incentives for people to buy an electric car or modify their existing vehicles to be powered by natural gas. The state should even promote the use of electric buses, said Theopemptou.

He said the fact that the state’s strategic plan for promoting electrical cars foresees the creation of just one charging station on every highway, and a handful in cities is indicative of its short-sightedness.

The MP also believes there may be something to the price manipulation claims as the state has had public consultations over the introduction of alternative fuels only with the importers of petrol-based fuels.

Furthermore, while other countries are putting restrictions on the use of diesel cars, with some EU countries announcing that they are to entirely ban the sale of diesel and in some cases petrol-powered cars by the end of the next decade, the government and the majority of parties do not even want to have such a discussion.

Blind eye

President of the Cyprus Consumers Union and Quality of Life, Loucas Aristodemou, told the Financial Mirror fuel prices were out of control.

He argued that there is no will from authorities to control the situation as even those who are paid to monitor the market are turning a blind eye.

Aristodemou said fuel importers have been manipulating the market for some time now, without interruption.

He said this time last year 95 Octane was 2 cents higher than that of diesel. By the end of the year, diesel was 11 cents higher than that of petrol.

When the association had asked for explanations from the ministry, it was told that it had to do with the biofuel that was added.

However, the ministry refused to tell us how much and what kind of biofuel was added, while also refusing to reveal the source of the biofuel.

The Association of Petrol Importers told the Financial Mirror it has unanimously decided not to comment publicly on fluctuations in fuel prices.

A source from the Energy Ministry said it believes the fluctuations in pump prices are normal and far from being fixed between the oil companies.

One should always have in mind the price of petrol sold in Cyprus should not be compared to an index portraying the price of crude oil, as we are talking about distilled products. They should rather compare to the equivalent Platts index, said the source.

The source added that despite the significant increase, Cypriot motorists are still paying less than the average price of petrol in the European Union.

The average price in the EU for 95 octane petrol in May was 1.48, while in Cyprus the price stood at 1.24, the average price for diesel in the EU was 1.37 while in Cyprus it stood at 1.26.

Source: The Financial Mirror