Taxes maintain fuel prices low

The price of the fuels traded in the fuel distribution stations in Romania is one of the lowest fuel prices in the European Union (EU), especially due to the taxation level, one of the lowest in the EU, ie 10 percent under the community average, reads Financiarul daily.

Thus, in Romania, the taxes, excise duties and VAT percentage amount to 50.4 percent of the petrol price and to 46.6 percent of the diesel oil price, while the European average is 60 percent for petrol and 53 percent for diesel oil. This fact has positive repercussions on the fuel price in stations, ie one litre of petrol costs 1.05 euros, and in the EU it is sold for 1.34 euros on average. Likewise, diesel fuel is traded in Romania at 0.99 euros/litre, while in the EU it costs 1.13 euros/litre on average.

In exchange, the tax-free petrol price is 0.52 euros/litre and for diesel oil it is 0.53 euros/litre, equal to the European average. Should the European average level of taxation be enforced in Romania, petrol would cost 1.31 euros/litre, ie 5.36 lei, and diesel oil, 1.13 euros/litre, ie 4.62 lei/litre, values that are high even for states with a GDP per capita much higher than the one in Romania, daily Financiarul reads.

The fuel price without taxes in Romania is slightly below the fuel price in other states where petroleum imports account for 80 percent-90 percent of the refined oil. In Germany, for example, both petrol and diesel oil cost 0.54 euros/litre, and in France, petrol has the same price as in Romania, 0.52 euros, and diesel oil is even cheaper, 0.50 euros/litre.

By comparison, the company that sets the tone for price changes in Romania, Petrom, imported only 16 percent of the oil it processed in 2009, the rest being ensured from its own production.

The explanation for the fact that Romania has the same prices as the states that register massive import of fuels consists in the fact that domestic refineries have very high costs. Recently, Wolfgang Ruttenstorfer, general manager of OMV, a company that controls Petrom, said that 200 million euros were lost annually in the two Romanian refineries: Arpechim in Pitesti (southern Romania) and Petrobrazi at Brazi (southern Romania).

This is why the Petrom strategy was reconfigured, with emphasis on exploration/production, and the refining sector will give up Arpechim next year. Starting last November, the refinery was closed due to the fact that is was not ecologic.

In Rompetrol, the refining activity was negative last year. In 2009, the operational result (EBITDA) was negative, roughly 36 million dollars. The Russian Lukoil, represented by Petrotel in Ploiesti (north of Bucharest), also reported losses for several years, and the last accessible information indicates a loss of over 200 million dollars in 2008. Rafo in Onesti (eastern Romania) renounced oil refining and reoriented towards the petrochemical sector.

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