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Greece will remain without heating oil this winter

15 October 2012 / 17:10:07  GRReporter
3011 reads

Victoria Mindova

We would neither buy, nor sell heating oil under the present conditions, the president of the federation of gas stations owners Michalis Kiusis told GRReporter. On Monday, the main representatives of the various federations of fuel trade met with Greek Minister of Finance Yiannis Stournaras to request the repeal of the alignment of the excise duty on heating oil with that of fuel oil. The meeting proved fruitless. The Minister’s position was that the alignment was Greece’s obligation to the lenders from Europe and the International Monetary Fund, on which the funding of the economy and the debt depends. Therefore, the government could not make any changes in the commitments, the Minister said.

15 October is traditionally the date on which trading in heating oil for the winter season begins each year. The state significantly reduces then the excise duty with which the oil used for local heating in the country has been burdened.

"It has become clear after the meeting of the associations of traders from all over the country with Minister Yiannis Stournaras that we cannot find a common path. We continue to insist on the position that we require the repeal of the increase of excise duty. We want an immediate meeting of the party leaders of the coalition government, who must find a solution. They cannot leave the people to stay in the cold this year because the accounts in the budget do not balance," Kiusis said.

In an informal conversation after the meeting, the president of the federation of gas station owners in Greece said that the traders in the areas of Florina, Kastoria and Kilkis have already decided not to trade in heating oil. The traders in all municipalities in the country will follow the same example too. He told reporters of a case of an elderly woman from the area where he has been trading. She declared that she would not buy heating oil this year because her pension has fallen from 800 to 600 euro, while the cost of drugs, electricity and other overheads have risen repeatedly since last year.

Traders said that if the levels of fuel prices were more reasonable, they could accept a two-year alignment period. Currently, prices are so high that there is even no reason to order from wholesalers because people do not want to buy.

On the first day of the beginning of the heating season, the average price per litre of heating oil in larger urban centres is 1.35 per litre. In the country, mainly in remote areas, the price starts from 1.40 euro and is expected to continue to increase. If a household needs at least one ton of heating oil in winter, the price becomes unbearable for the majority of the Greek population, experts say.

The government insists that the alignment of excise duty on heating oil with that of oil for different applications will solve the problem of illicit trade. Their view is that if there is no cheaper and more expensive oil, there will be no way of illegally trading heating oil as fuel oil. "If the only purpose of the government is to solve the problem of smuggling, it should introduce a special subsidy to all households by the end of the season, which will offset the losses incurred from the excise duty alignment," fuel retailers suggest. The Ministry of Finance’s response was a resounding "No".

In addition to the obvious solution to the problem of illegally trading heating oil as oil for transport, the government wants to increase the revenue in the state treasury with the new measure. According to traders, the government's objective will not be achieved because this winter, people will switch en masse to alternative and cheaper methods of heating. People will prefer to stay in the cold this winter rather than borrow money to buy oil, representatives of traders said after the meeting. At the same time, higher excise duty will increase the tendency of incorrect traders to make fictitious exports of oil in order not to pay any excise duty and then, to sell the smuggled fuel in the local market. Most of the systems for fraud relate to the border regions of the country, according to the report by Professor Dimitris Mardas presented last week.

 

Tags: EconomyMarketsOilExcise dutyAlignmentWinterGreeceCrisis
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