The energy transition is being made at a high cost for the European market as well as market distortion dangers that need to be addressed, officials of SEEPE, the Hellenic Petroleum Marketing Companies Association, have stressed at a news conference.
It is extremely crucial that government policy packages do not allow for exclusions, while also paying attention to the petroleum sector’s sustainability, aligned with the idea of a truly fair and smooth transition, SEEPE officials pointed out.
Close coordination is needed, even internationally, as climate change is a global problem, the association noted, adding that the European market cannot bear the cost of the green transition without significant support in a globally competitive environment.
The petroleum sector will face challenges as a result of the gradual reduction in the number of fuel-powered vehicles by 2035, given the European Commission’s climate change objectives, SEEPE officials noted.
Despite the energy transition challenges, Greek petroleum companies are embracing the energy transition towards carbon neutrality, they added.
Investments will be needed while the petroleum sector’s new commercial strategy, to enable a transition from conventional fossil fuels to eco-friendly fuels, is vital, the SEEPE officials stressed.
The country’s petroleum product traders and petrol stations are under extreme pressure as a result of the dramatic sales decline in March, down by as much as 70 percent. The drop is expected to sink deeper, to 90 percent in April. A decline of about 70 percent is projected for May.
These figures, provided by SEEPE, the Hellenic Petroleum Marketing Companies Association, are reshaping the liquid fuels market and could drive many petrol stations out of business.
A government measure postponing check payments by 75 days promises to offer some relief to the sector’s enterprises but does not take into account fuel market’s particularities, namely a heightened level of taxes on fuels, representing about 70 percent of prices.
Petroleum traders, who fully prepay these taxes when purchasing their fuel quantities, now face a liquidity squeeze as most of their customers, such as industrial enterprises, public sector companies and petrol stations, choose to pay by check.
Petrol stations are also under pressure as many of their customers have issued checks for payments. The resulting cash-flow squeeze faced by petrol stations has made it more difficult for them to place orders with fuel traders, who offer limited credit periods.
The measure postponing check payments promises to benefit just over one in six of the country’s 6,000 petrol stations, the 1,200 or so owned and operated by petroleum traders.
Many petrol stations could go out of business if checks issued by their customers are not exempted from the government measure and market conditions do not soon improve, petrol station owners fear.
Full implementation of a fuel trade monitoring system designed to clamp down on smuggling in the sector does not appear likely any sooner than 2021 despite being ratified by the previous government last April and first presented a decade ago.
The former Syriza government’s related legislation indicates the plan’s full implementation is estimated for the end of 2021.
Judging by the long delay, the eradication of fuel smuggling does not appear to be a top priority for the Greek State, even though it is being deprived of annual tax revenues estimated at 300 million euros.
The monitoring system, designed to track fuel inflow and outflow trading data, is not yet fully operational. Various corrections and a pending ministerial decision that concerns issues such as the method and regularity of data dispatches to the General Secretariat for Information Systems (GSIS), a division of the economy and finance ministry, are still needed.
SEEPE, the Hellenic Petroleum Marketing Companies Association, has intervened and expressed a willingness to assist the Greek State. The association has proposed making a financial contribution for the system’s swifter implementation and training of inspectors.
Manipulated petrol station pumps, adulterated fuel and a lack of inspections by authorities, all persisting Greek fuel market problems, are contributing to illicit fuel trade worth as much as 250 million euros, annually, local industry authorities have noted.
This development has had a major negative impact on the local market. Over the past decade, heating fuel tax has risen sharply from 21 euros to 280 euros per ton, the fuel sector’s annual aggregate revenue figure has dropped by 600 million euros, more than 3,000 petrol stations have gone out of business, and annual volume-based consumption has shrunk by 40 percent, from 11.4 tons to 6.9 million tons.
An inflow-outflow monitoring system for petrol stations, introduced in 2014 as a measure to counter fuel smuggling, has not yet been fully implemented despite costing hundreds of millions in private and public-sector money.
A plan to install GPS systems on fuel trucks as a means of monitoring their movements has remained pending. Technical details and procedures concerning this measure have yet to be established.
Fuel smugglers have been left to roam without restriction, Roberto Karahannas, head of SEEPE, the Hellenic Petroleum Marketing Companies Association, noted yesterday during a presentation of fuel market developments.
In the heart of summer, the cost of unleaded fuel at petrol stations on the Greek islands reached the 2-euro per liter level, prompting RAE, the Regulatory Authority for Energy, to propose the implementation of a price ceiling in 17 regions. However, the Economy and Development Minister Yiannis Dragasakis tabled a counterproposal entailing the adoption of a subsidies measure to offset fuel transportation costs as the most effective way of tackling the issue.
Now, several weeks later, unleaded fuel prices on islands have risen again to levels just below 2 euros per liter. Meanwhile, government officials do not appear to know what this subsidies measure will end up costing, how many liters of island-bound fuel it will be valid for, and if funds exist to finance it.
Financing such a measure should not be an issue for the government. Petrol station companies contribute 1.2 percent of the price of each liter of fuel to the national budget, SEEPE, the Hellenic Petroleum Marketing Companies Association, has reminded in seven letters forwarded to six different ministers over the past three and a half years.
Mid-way through 2015, the government abolished a special account taking in these payments but petrol stations have needed to keep paying their 1.2 percent contributions over the past three and a half years. It has remained unclear where this money is ending up, how it is being utilized and by whom. Yet, the 1.2 percent surcharge on fuel remains attached to the retail sums paid by consumers. The surcharge was introduced with the purpose of restricting fuel prices on islands.
SEEPE, in its series of letters addressed to ministers holding ecomomy, energy and finance portfolios, has demanded to be informed on how this pool of funds is being used but has yet to receive any response.
Roughly 6 million tons of fuel is transported each year, meaning that funds raised through the surcharge amount to between 45 and 50 million euros per year.
The Ministry of Economy and Development, unsure as to whether it should adopt a RAE (Regulatory Authority for Energy) proposal calling for the imposition of price ceilings on unleaded fuel to combat high prices in various parts of Greece, especially islands, has deferred any decision until no sooner than next week. The government has shown restraint on the necessity of such a measure.
Market data presented by fuel market officials at an economy and development ministry meeting yesterday acknowledged fuel price increases but rejected any need for the implementation of price ceilings due to profiteering claims and suspicions.
SEEPE, the Hellenic Petroleum Marketing Companies Association, presented data indicating that profit margins for fuel suppliers and retailers have narrowed by levels of between 7 to 15 percent compared to a year earlier.
The association presented data concerning various parts of Greece under the spotlight, such as the Cyclades. A 33 percent increase in international oil prices was limited to 11 percent in this region should a special consumption tax (EFK) and VAT be factored in, SEEPE contended.
POPEK, the Panhellenic Federation of Fuel Station Owners and Oil Traders, also represented at yesterday’s meeting, contended that fuel price increases exceeded the national average at approximately just half of the 17 prefectures for which price ceilings were proposed by RAE.
The ministry’s leadership assured meeting participants no final decisions on price ceilings have yet been reached, while reminding that the RAE study is not binding.