CONSUMERS are paying artificially high prices for petrol because oil companies are massively pre-fixing fuel prices, the House European Affairs Committee and the Commerce Committee heard yesterday.
The two committees met jointly to discuss Cyprus’ obligation towards the EU to maintain strategic oil reserves and create a free competition environment.
During the session, the head of the Commerce Ministry’s Energy Service Solon Kassinis came into conflict with oil companies after insisting fuel prices were exceptionally high.
Kassinis launched an attack against oil companies, which he said had refused to lower their prices despite massive international decreases.
Six months ago oil prices were over $140 a barrel. Last week the price went under $35 a barrel.
But a spokesman for the oil companies insisted fuel was being sold at normal prices, considering they were still trading reserves from when the international prices were much higher.
Kassinis said his department sends the European Commission price lists for various types of oil, such as 95 Octane petrol, diesel and heating fuel, every Monday. It then compares fuel prices in Cyprus with those of the EU.
The two committees yesterday concluded that according to the data submitted to them, even though companies import oil on different dates, they all end up with the same retail prices.
Furthermore, in some cases, there were companies that hadn’t yet received new fuel shipments but were altering their prices in line with other companies irrespective.
Speaking after the joint meeting Chairman of the European Affairs Committee, DIKO’s Nicos Cleanthous said maintaining free competition in the fuel market was part of Cyprus’ duties towards the EU.
“The lack of healthy competition projects what all involved bodies are admitting and that is that we don’t have a monopoly but we definitely have an oligopoly, which is equally dangerous,” he said. “At the same time, it seems there are fixed price-lists, which means companies are agreeing beforehand what prices they should set.”
Delays in creating a fuel facilitation terminal in Vasiliko were not helping the situation, he added. “Foreign companies that may have been interested in becoming active in Cyprus and compete with the others are effectively being deprived of the basic substructure to do so,” said Cleanthous.
In an announcement yesterday, ruling party AKEL called on oil companies to “adjust their prices in accordance to the real condition of the market, putting an end to provocative profiteering at the expense of consumers, especially during the international financial crisis”.
It added: “The international price of petrol, after perpetual reductions, has reached $42 a barrel, but unfortunately in Cyprus oil companies continue to maintain retail prices at unjustifiably high levels, profiteering at the expense of consumers.
“Apart from the huge reductions in fuel prices, there were also parallel reductions in transportation costs, which is why there is no justification for the exceptionally high prices of heating fuel and especially petrol,” AKEL said.
Meanwhile, the head of the Committee for the Protection of Competition (CPC), Costakis Christoforou, who holds a key position in the whole affair, sent a letter to the President of Parliament informing him that for practical as well as substantial reasons, he would not be attending the parliamentary meeting.
Christoforou was yesterday quoted in Politis newspaper saying, “While the matter is being examined by the CPC, our implication in other equally respectable procedures, even if this is practically possible, leads to unnecessary consequences, which for obvious legal reasons are ill-advised”.
The CPC head felt the need to specify his position following a misunderstanding that took place between himself and the Commerce Committee when the high cost of living was discussed at the House two weeks ago.
Even though Christoforou had sent a letter to the President of Parliament explaining that he wouldn’t be attending as the probe into oil prices was still underway, the Committee had not been informed.
Citing sources, Politis also revealed that the hearing procedure into the fuel prices’ probe has wrapped up, with the CPC awaiting some final supplementary information from the companies’ lawyers.
A detailed examination of the entire affair is expected to begin by the end of this week, so that the final report on the oil issue can be drawn up.
It recently emerged that leading up to the hearing, the CPC noted initial violations of competition laws.
The retail prices of oil products and their connections to the international prices of petrol and Platts products (distilled products) provoke frequent rows between oil companies and deputies as well as between the companies and the Commerce Ministry. But they have also divided governmental departments, with the Ministry’s Competition and Energy Services at loggerheads over whether prices can be justified.
On Monday, Esso companies Exxon Mobil and Lukoil lowered their petrol prices by 0.5 cents a litre and diesel by two cents. Heating fuel has also dropped by 1.3 cents a litre. Petrolina is also expected to announce reductions today.
