TIRANA, Feb. 1 – Albania’s business community represented by Konfindustria, has reiterated its request to government to establish a watchdog monitoring the fuel and liquid gas market in the country following the sharp increase in diesel and petrol prices during the past two months.
In a statement issued last Sunday, Konfindustria blamed the ill-functioning of the market on the lack of a Fuel Regulatory Entity.
“The Entity must serve as a watchdog and regulator on subjective price distortions in the strategic fuel market, including the liquid gas market, when compared to international market prices, and prevent extra costs for businesses, industries and citizens,” says Konfindustria, appealing for the immediate establishment of the regulatory body.
According to the confederation of Albanian industries, the continuing extra costs from ill-functioning of the oil market are lowering the competitiveness of domestically-produced products, adding problems to the Albanian economy at a time of global crisis.
“Examples of such institutions are found not only in developed EU countries, but also in the Balkan region,” says Konfindustria.
With an annual turnover of 800-900 million euros, the fuel market is one of the biggest industries in the country and has a direct impact on all sectors of the economy and citizen’s welfare.
Konfindustria’s director Gjergj Buxhuku said last year the establishment of the Fuel Regulatory Entity was becoming a necessity because of lack of state institutions that could intervene in the strategic market to regulate prices in case of abuses.
Buxhuku explained the recent continuous increase in fuel and gas prices with the possible existence of a cartel agreement among market operators.
“The continuous ill-functioning of the oil market in Albania, under the conditions when theoretically we have a liberalized market could be explained only with the existence of a ‘cartel’ type of agreement among market operators,” said Buxhuku.
However, data from the Albania oil portal, karburant.com, show some 180 companies operate in the wholesale oil and liquid gas market and another 1,000 in the retail market, making the market fully liberalized.
Oil, liquid gas prices rocketing
Oil prices continue remaining at their highest historical levels in Albania even during the beginning of this year with diesel and petrol sold in some petrol stations up to 170 lek/litre (1.55 dollars). Experts explain the situation with soaring prices in international markets where prices are reported to have reached up to 100 dollars per barrel, and the depreciation of the national currency, lek, against the US dollar and the euro.
Lower production from local refineries which is also increasing Albania’s dependency on imports and possible abuses by wholesale traders has also affected the situation.
Fuel prices at the beginning of 2010 were at 132 lek/litre before starting their gradual growth of up to 155 lek at the end of 2010. Wholesale traders say the state policies also play a major role considering that 50 percent of the final oil price is paid in taxes.
The high tax burden, with excise tax currently at 37 lek/litre, VAT at 20 percent, the newly increased carbon tax, port taxes and transport expenditure all add to the final price.
The situation has led to less traffic with more and more people using public transport unable to afford current prices as unemployment rises and revenues drop.
Currently, Albania’s oil prices are at the same rate as in most EU countries where prices vary from the lowest 1.06 euro per litre in Bulgaria to 1.48 euro per litre in the United Kingdom, according to Eurostat’s December 2010 data, despite the sharp difference in revenues.
The situation for liquid gas which is commonly used as a cheaper alternative to electricity for cooking and heating appears the same. Gas prices have increased by another 20 lek per litre during the past few months but the situation seems and could further increase following a government decision to install cash registers in wholesale and retail sale points. Liquid gas companies operating in Albania have strongly opposed a Finance Ministry decision which obliges them to install new costly cash registers measuring gas in litres and not kg as they currently do. In a joint statement after a meeting this week in Durres, the wholesale gas companies threatened to suspend the sale of gas if the Finance Ministry does not cancel its decision.
