Government in no hurry to renew petrol price mechanism as oil prices stay low

By Jennie Matthew

PETROL prices will not drop in accordance with the automatic pump price mechanism, which ran out yesterday, nor does the government have any immediate plans to renew it.

The 2000 law adjusted petrol, diesel and kerosene prices in accordance with fluctuations in exchange rates and the price of barrels of crude oil, slashing government subsidies to petrol companies from £25 million to a maximum of £4 million a year.

Given the drop in barrel prices from $26 to $20, pump prices should have fallen by two cents a litre from today.

But the Council of Ministers yesterday shelved discussions over the future of the law, and Commerce Minister Nicos Rolandis said yesterday that he had no idea when a decision would be taken.

Instead, consumers will be forced to shell out proportionally high cost for fuel, as international prices stay low.

” I can’t change prices tomorrow anyway,”Rolandis told the Cyprus Mail , indicating that the government did not see the law as a high priority.

He added that the future of the law, or any replacement for it, had to be discussed with the political parties before the Council of Ministers could take a firm decision.

The mechanism had been brought in last year as government subsidies soared to keep track of rising oil prices and parliament stalled over unpopular price rise. The system was seen as a way of bypassing the lengthy political wrangles every time prices had to be raised.

The government has said it may cap pump prices once the energy sector is liberalised in 2003, a factor likely to play a part in future discussions about the petrol price mechanism.

The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.