Gains, losses seen in geographical-based heating fuel subsidy plan

Revisions to heating fuel subsidy criteria for households currently being worked on by alternate finance minister Tryfon Alexiadis and his associates are expected to produce both gains and losses for consumers, the objective being to establish a fairer and more focused system.

A proposal already forwarded to the Prime Minister’s office divides households eligible for fuel subsidies into four climate-linked geographical regions. Based on this proposal, heating fuel subsidies will be available for maximum annual quantities per household ranging from 500 to 2,500 liters, depending on the region, according to the proposal.

Eligible households will also be subject to income and property criteria, which, according to sources, will remain unchanged compared to last winter’s system.

A total of 105 million euros will be provided for heating fuel subsidies compared to 210 million euros last year.

Fuel prices set to increase as of June 1 following tax hike

Fuel prices in the Greek market are set to rise as of June 1 following a recent government decision to increase the special consumption tax (EFK) imposed on fuel.

The tax on unleaded fuel will be increased to 700 euros from 670 euros per 1,000 liters. This will result in an increase of about five cents per liter for unleaded fuel at the pump, from the current aveage of 1.35 euros per liter to 1.40 euros per liter.

In the diesel category, the special consumption tax will increase from 330 euros to 410 euros per 1,000 liters, which will result in a hike of eight cents per liter, from one euro per liter to 1.08 euros per liter.

As for heating fuel, the special consumption tax will increase from 230 euros to 280 euros per 1,000 liters, leading to a retail price increase of six cents per liter, from 75 cents per liter to 81 cents per liter.

The tax imposed on auto LNG will be increased from 330 euros to 430 euros per 1,000 liters.

Natural gas used at gas-fuled power stations will be exempted from the special consumption tax as a measure aiming to support the country’s industrial sector.

ELPE fuel sales up in February, wider turnaround not certain

Fuel sales at ELPE (Hellenic Petrolum) increased by five percent in February, year-on-year, but it remains unclear whether this encouraging company development suggests an overall turnaround for Greece’s fuel market.

Auto diesel fuel sales increased by 15 percent, but heating fuel sales fell by 35 percent, subdued by the warmer-than-usual winter weather, while marine fuel sales increased sharply. More specifically, marine diesel oil sales rose by 50 percent and mazut sales were up 35 percent.

Whether the rise in fuel sales experienced at ELPE in February reflects a wider trend will be made clearer over the next few days when more market data becomes available.

January proved to be a poor month for fuel sales in Greece, compared to the equivalent month a year earlier. Unleaded fuel sales fell by 9.7 percent, auto diesel fuel sales were down 7.7 percent, heating fuel sales dropped by 17 percent, marine diesel oil sales fell by 18 percent, mazut sales fell 10 percent, and LNG sales dropped by 4.7 percent. Jet fuel was the only fuel product to register a sales increase in January compared to the same month a year earlier, rising by 4.3 percent.

Certain market pundits believe that January’s poor fuel sales figures may be linked to the month’s increased fuel stock levels, a customary January condition resulting from bigger orders placed by companies in preceding months, which subsequently reduces order sizes in January.

Sales trends aside, fuel sector officials are alarmed by the reports of possible fuel tax increases. Fuel sales will inevitably decline, the state will lose rather than gain tax revenues, while illicit fuel trading activity will rise as consumers seek cheaper fuel stations, officials warn.

Between 2010 and 2016, auto fuel sales fell by 34 percent and heating fuel demand plunged by 53 percent following two major tax hikes for fuel (special consumption tax and VAT). During this period, between 3,500 and 4,000 fuel stations went out of business, roughly 10,000 ot 12,000 jobs were shed, not including several thousand indirectly linked job losses, while the market was flooded with provisions for bad debt worth millions of euros.

Meanwhile, fuel smuggling practices have remained virtually untouched. An “inflow-outflow” data system legislated by a preceding administration back in 2012 with the objective of tracking petrol station fuel purchases and sales is not yet fully operational. Also, a plan to fit GPS systems onto fuel trucks as a means of monitoring their moves has not been completed. Illicit trade for marine fuel is rampant.

 

 

Sharp heating fuel sales increase registered in 2015

Data just released on the country’s fuel sales for 2015 have shown a slight decline in auto fuel consumption, down by 46,712 tons compared to the previous year, while heating fuel registered an impressive 43 percent year-on-year increase. Consumption in the heating fuel category increased by 417,210 tons compared to 2014.

Overall fuel sales increased by six percent as a result of the considerable rise in heating fuel demand.

Unleaded auto fuel sales continued to drop amid the ongoing Greek recession. It is believed that the lower prices offered in 2015 helped restrict the decline experienced in the preceding years. A six percent decline in auto fuel sales had been registered in 2014. The drop was limited to three percent in 2015, for sales totaling 2.46 million tons.

On the contrary, auto diesel sales, which proved dynamic in 2014 to register an eight percent sales increase, ended up losing momentum in 2015. Despite the lower prices offered, auto diesel sales increased by just two percent in 2015, to 2.51 million tons.

Heating fuel sales figures definitely provided the sector’s brightest news for the year. The 43 percent sales increase took total heating fuel sales to 1.39 million tons in 2015 from 971,454 tons in 2014.

Early fuel sales data for 2016 indicate that the year has begun slowly with subdued sales figures in all product categories.

Sharp heating fuel demand boost registered in December

The local fuel market ended the year with a considerable boost in demand propelled by a significant increase in heating fuel orders during December, according to business news source capital.gr.

Many petrol trading companies experienced order increases of up to 40 percent in the final month of 2015, which came as respite amid a year of sharp fluctuations, good and bad news, all of which ultimately heightened insecurity, as it has become unclear how much further the price of crude can drop in the international market.

The local heating fuel orders boost in December, especially during the festive season, has been attributed to lower prices and favorable terms offered by competing suppliers.

Heating fuel prices, whose national average was less than 75 cents per liter and under 70 cents in the wider Athens region, have now fallen to levels of four years ago.

Intensifying rumors of limited heating fuel subsidies that could be swiftly absorbed by entitled households also helped boost heating fuel demand.

Although this winter season has been mostly mild in Greece compared to last year, the sudden dip in temperatures experienced around the country during the New Year period also helped boost fuel demand.

Despite the late-year surge, 2015 ended as a subdued year, overall, for the fuel sector. Encouraging signs during the year’s first half were suddenly devastated by the arrival of capital controls in the summer. The restrictive banking measures altered the market’s sentiment and led to a drastic decline in demand. It took until October for the fuel market to regain some sense of balance. December’s boost will certainly offer some improvement to the sector’s overall results for 2015. The sector suffered a bad year in 2014, incurring an overall loss of some 65 million euros.