From: Alice Taylor
Analysis: Albania’s U-turn on Fuel Price Increases amid European Action

Following two days of protests, Albanian Prime Minister Edi Rama has announced that a national board would decide the price of fuels at the pumps. Anyone found violating the approved prices will face the closure of their business.

The decision comes after the price of petrol and gas in Albania reached the highest levels in Europe yesterday, despite the country being one of the continent’s poorest nations. The price hikes led to widespread protests in Tirana and Durres, the arrest of over 25 citizens, and accusations of oligarchs manipulating the market.

On Thursday night, as citizens protested, Rama was absolute that the state could not control energy prices. He stated on social media that the government had not done this since communist times.

“Oil is a commodity in the free market, and the government has relinquished control of the market price since 1990. The state does not set commodity prices. The state can not decide and can not impose prices”, said Rama.

Nevertheless, he said the Council of Ministers would draft a plan of measures to address price increases that could be introduced within a week.

“Within 48 hours, the plan of measures will be drafted,” he said.

Then, on Friday morning, government representatives, including Energy Minister Belinda Balluku, the director of customs and chairman of the competition authority, met stakeholders from the fuel industry today to negotiate measures.

Rama said, “There will be no sign at any gas station where a price will not be displayed without board approval. Whoever does so will lose. I am not an ideologue of the free market of the state as a dictating force in the economy, but I think that economic freedom is fundamental,” Rama said.

The measures will come into force through a normative act, Rama announced.

While markets have somewhat stabilised in the last day, the prices are still extremely high. Petrol is 223 lek a litre (EUR 1.81), Benzine 245 lek (EUR 1.99) and Diesel 223 lek (EUR 1.81).

Rama has consistently blamed the high prices on the war in Ukraine and the cost of fuel from suppliers.

Citizens and protestors continue to note that 53% of the cost of these fuels is government taxes. They have called for a decrease in taxes to ensure that the costs do not rise for them, something the government has not addressed.

Measures in the rest of Europe

Meanwhile, most countries in Europe have taken steps to protect consumers from rising fuel prices, recognising the knock-on impact on other industries and services.

In North Macedonia, the government acted swiftly to amend the law on VAT and excise tax to prevent further price increases. The government said they would remove VAT on basic food products and reduce taxes on fuel in a package worth EUR 400 million.

Under the package, the government will remove VAT and freeze margins on sales of bread, sugar, flour, edible sunflower oil, milk, meat, rice and eggs. Currently, VAT on these food products is 5%.

The government will also remove customs duties on all imports of basic food products and scrap VAT on imported natural gas, electricity, thermal and cooling energy. VAT on fuels will be lowered to 10% from 18%.

In Romania, the government announced it would crack down on fuel retailers by conducting extensive monitoring of prices at pumps. Any found raising prices artificially will be fined.

The Consumer Protection Authority (ANPC), the Competition Council, and the tax authority have all started investigations, and the government’s spokesman already announced the first fines on Thursday evening.

The Portuguese government have rolled out a financial subsidy for fuel purchases at a rate of 40 euro cents per litre, up to a total of 50 litres a month. At the start of November 2021, the government reimbursed citizens 10 euro cents per litre, but as the crisis has intensified, they increased it to 40 cents.

The government estimates that the increased Autovoucher discount will cost the state coffers €40 million.

This week, at the end of an extraordinary meeting of Social Concertation, Prime Minister António Costa said that this measure would remain as long as necessary.

In Hungary, the government quickly rolled out measures including a price cap, lower excise tax, and punishment for those that scaremonger. In addition, restrictions have been put on where and how much certain kinds of vehicles can top up.

Serbian President Aleksander Vucic announced a series of measures to protect fuel and food markets and consumers. This week, he said the Serbian government would soon decide to waive 20 pct of excise duties on oil derivatives and lift duties on oil imports from third countries to ensure supplies to the NIS oil refinery and minimise an increase of oil derivative prices at petrol stations.

He said the diesel price at NIS petrol stations would remain the same for farmers for at least a month and a half.

He also announced that exports of flour, maize, wheat and edible oil would be banned from Thursday 11 March.

Across the southern border in Greece, the government has taken measures to protect consumers from increased prices. A cap on gross profits on fuel, food, and other consumer goods to curb profiteering.

The restrictions will apply on goods and services that are essential for food, health, safety, and transport.

“I don’t want to tell people lies. The coming period won’t be easy in terms of prices,” Development Minister Adonis Georgiadis told Greek radio last week.

In Bosnia and Herzegovina, parliament adopted amendments to tax laws to abolish excise duties on fuel in efforts to slow down price increases.

Even Montenegro has moved to protect citizens. The Ministry of Finance and Social Welfare has submitted a draft on amendments to the law on excise duties to the assembly. This will allow the government to reduce excise duties on fuel by up to 20%.

“The decision could be made for a period of one month, with the possibility of extending it depending on the situation on the world market and the changes of fuel prices in Montenegro, in order to ensure the petroleum product price stability,” the ministry said in a statement.