THE CONSUMERS’ Association yesterday warned that fuel rises approved by Parliament on Thursday could spark a chain reaction of price increases in other products and provide unscrupulous individuals with new opportunities for profiteering.
The Association’s fears were echoed by the Employers and Industrialists’ Federation (OEV), who warned of chain increases because oil was necessary in the production of other products.
In turn, this would have a direct impact on the economy, creating inflationary pressures, the Federation said.
“Businesses will be asked to pay these increases twice, once as a cost of production and another one through CoLA (the cost of living allowance), which will go up since price increases not caused by taxation are taken into consideration in its calculation,” OEV said.
The chairman of the Consumers’ Association, Petros Markou, said things were getting worse.
“We’re going from bad to worse, despite the fact that the price hikes were result of the international situation,” he said.
Markou said consumers were both infuriated and depressed, since more price rises were bound to follow, and that could give the chance to many to engage in profiteering.
Markou wondered if the government couldn’t have hung on for a couple of months until a new pricing system was implemented, but added that, on the bright side, consumers had the government’s commitment that prices would fall with the new method.
“We have the minister’s promise that prices will fall when the refinery closes and is converted into a fuel terminal and the system changes,” Markou said.
“But will the product prices go down too?” he asked.
The current pricing system dates back around three decades and guarantees a12 per cent profit to petrol companies, calculated on each one’s historical capital and reserves.
With liberalisation and the closure of the refinery, the state expects prices to fall.
The target date for that is May 31, according to government sources.
Liberalisation will be accompanied by the necessary legislation, which will give the Minister of Commerce and Industry the power to intervene if prices go out of control.
The government would set the consumer tax and VAT and from then on the companies will have a free hand in setting their profits.
If, however, prices are considered by the government to be too high, the minister will have the power to issue an order setting a price ceiling for 45 days.
Any company failing to comply would be committing an offence.
Government experts expect that – in the absence of international turmoil sending oil prices up – fuel prices on the island will go down.
Government sources believe the new state of affairs will give the chance to smaller companies to enter the market, as they could benefit from lower costs.
