Milatić: From tomorrow, fuel prices will increase

Fuel prices will increase from tomorrow, with new prices per liter set at 11.10 kuna for eurosuper, 13.44 kuna for diesel, and 9.80 kuna for blue diesel, said Ivo Milatić, the State Secretary for Energy, on Monday.

Current prices are 10.72 kuna for basic eurosuper, 12.30 kuna for diesel, and 8.49 kuna for blue diesel.

In a statement ahead of the conference ‘Challenges of the Croatian Industry 2022/2023’, Milatić said that the government ‘decided this week on a 15-day price formation, so that the trading margin of 65 lipa per liter is included in the price, resulting in new prices of 11.10 kuna for eurosuper, 13.44 kuna for diesel, and 9.80 kuna for blue diesel’.

He announced that the initiative from distributors to establish a stance on the premium or margin, so that the decision-making period is standardized to either 15 or 7 days, will be seriously considered. He stated that the trading margin will not be less than 65 lipa.

– You cannot stop a tsunami, but you can allow the defense to be so effective that those who should stop the tsunami do not perish. Translated into Croatian, we could not allow Croatian suppliers of oil derivatives to incur losses of 70 to 1.50 kuna per liter this week – said Milatić.

– The state must not do that because it could jeopardize supply security, as clearly, people cannot buy fuel at a price they know will result in a loss. Besides defending the price, supply security must come first. It is of no use to you to have potentially cheap fuel at the pumps if it is not available – he added.

When asked if this is capitulation to the world market, he replied that it is not, as margins are still being fixed.

According to him, citizens are not left to the tsunami of the market, as the government has protected them in every possible way, and this is also the case with gas and electricity.

– You cannot have something eternal; with every price fixing, we created losses for distributors, we did this consciously – if the state decided to forgo huge funds, it is fair that everyone contributes – he emphasized, adding that the government has reviewed the financial indicators of distributors and concluded that ‘it will not kill the cow for a kilogram of meat, but will create a balance between the losses incurred by distributors, the benefits for citizens, the state, and entrepreneurship, and arrange the situation to ensure stability and that everything functions’.

None of the distributors, he said, asked in meetings to earn and profit excessively, ‘but they literally said, let us not incur losses’.

When asked if the price increase will accelerate inflation, he replied that fuel prices will continue to move within the ranges that have been seen, and today’s prices have already been seen six months ago.

Primorac: The market will partially determine fuel prices

Finance Minister Marko Primorac said ahead of the same conference that the government will allow the market to partially determine the prices of oil derivatives, meaning that there will not be a fixed limit this week as there was last week.

At the government meeting, it was decided to allow this, in a way, market action, meaning that we will not fix prices, said Primorac.

When asked if prices will be fixed again if the need arises, or if there is room for prices to be reduced due to margins and other factors, Primorac said that there is minimal room regarding excise duties – 19 or 37 lipa per liter of diesel or eurosuper to be at the European minimum.

The finance minister also confirmed that in the upcoming period, it will be considered whether the prices of derivatives will change weekly or bi-weekly, to make it more predictable. When asked about the so-called flexibility of electricity prices, Primorac reminded that the government’s (autumn) package of measures has a limited duration (until the end of March 2023).

– I expect that in the next period, if the situation remains as it is now in the markets and generally, there will have to be some flexibility, meaning that the subsidies currently practically provided by HEP will have to be gradually reduced – he said.

HEP, he added, incurs certain losses because of this, and those losses are accumulating. We will monitor the situation, monitor HEP’s financial operations, said Primorac, adding that such subsidies cannot last forever.

Current subsidies last until the end of the first quarter of next year, and no decisions will be made to reduce those subsidies, but in the next packages of measures, something will have to be redefined, concluded Primorac.