Petrol: If the same price regulation model continues, our losses will rise to 68 million euros in 2023

Since February 7, 2022, when retail prices of petroleum products were regulated in Croatia, Petrol has been forced to sell petroleum products at a negative margin, according to the company’s statement. Petrol operates 202 gas stations in Croatia and employs over 2,200 people, and the damage from the regulation of petroleum product prices for 2022 amounts to 45.6 million euros, and if the same regulation model continues, the damage would rise to 68 million euros in 2023 – totaling 114 million euros.

The management of Petrol has continuously called on the relevant ministry and the Government of the Republic of Croatia to amend the disproportionate measures (12 letters have been sent to the Ministry of Economy and Sustainable Development and the Government of the Republic of Croatia, and five meetings have been held, with today’s sixth meeting with the relevant minister). They also warned the Croatian Government that continuing the application of the existing regulation would make it impossible for the Petrol Group to supply the Croatian market with petroleum products. Despite numerous activities aimed at ending the disproportionate and unsustainable regulation, no solutions have been found to date.

Given the unsustainable regulation of petroleum product prices and the economic damage inflicted on the Petrol Group in 2022, the Petrol Group in Croatia is forced to take further measures to protect its interests.

As a result, they announced yesterday the closure of gas stations in Croatia for one hour, and were subsequently invited by the minister to a meeting at the Ministry of Economy and Sustainable Development. The meeting was held this morning, and the minister communicated the intention to increase the regulated margin from the current 0.65 kn/l to 0.75 kn/l.

Petrol does not have its own refinery and purchases all petroleum products on the market. Given that the procurement conditions for 2023 are significantly worse compared to 2022, the announced increase of 0.10 kn/l in the regulated margin does not cover the mentioned increase in procurement prices of petroleum products, putting them in an even more unfavorable position compared to 2022 and generating further losses.

Temporary Suspension of Energy Sales

Since the announced corrections in the regulated margin are insufficient for sustainable business in the Republic of Croatia, Petrol has today again closed its sales points from 12:00 to 13:00 (except for gas stations on highways and maritime property). By closing, they appeal to the Government of the Republic of Croatia to find a sustainable solution for the supply of derivatives and uninterrupted business in the Croatian market.

They state that the current regulatory measures in the field of petroleum product trade are disproportionate, as market conditions have changed, with oil prices returning to levels before the start of the war in Ukraine, and there is no longer a need to regulate petroleum product prices. The regulation is inadequate as it destroys the market.

The Petrol Group expects the Government of the Republic of Croatia to create a legal framework for establishing a business environment that will enable competitive market operations and investments or development, which is urgently needed in the energy sector. If there are no appropriate market conditions for certain energy products in some markets, business restructuring will be necessary, which means that a temporary suspension of the sale of those energy products will need to be considered until appropriate market conditions are established. They express their belief that conditions for sustainable business will be agreed upon and that there will be no fuel shortages or disruptions in the supply of petroleum products to the Croatian market.

However, otherwise, Petrol will submit a proposal for a peaceful resolution of the dispute to the State Attorney’s Office of the Republic of Croatia, and in the event of unsuccessful peaceful resolution of the dispute, will file a compensation claim to secure its legal and financial position. Given that market disruptions are such that it does not function, the issue of the effects of regulations and state aid will also be referred to the European Commission.