Serbia, Pumps on the brink of survival and with a bigger margin

, News Serbia Energy

On Thursday, the Government of Serbia adopted a decree that increased the margin of retailers of petroleum products, i.e. gas stations, from seven to nine dinars.

This followed warnings from businessmen that further limiting the retail price of fuel with the current way of determining the wholesale price will lead to the closure of private gas stations.

However, these two dinars to increase the margin will only reduce the loss of gas stations, but will not enable them to make a profit, according to the pump owners.

Milan Rakić, the president of the Association of Gas Station Owners, points out that gas stations have been operating at a loss since March, when the regulation on limiting the prices of petroleum products was adopted. But the problem is not in the limitation of the retail price itself, but as Rakić claims, in the rulebook for determining the wholesale price.

“In March, when the decree was passed, Brent oil cost 97 dollars per barrel, and a liter of Eurodiesel cost 179 dinars.” Today, when a barrel of oil is 82 dollars, a liter of Eurodiesel costs 209 dinars. This is possible because the state pushes profit into the NIS, at the expense of its citizens”, Rakić claims.

According to the regulation, the retail price of fuel is determined by adding nine dinars of margin for distributors to the wholesale price.

The wholesale price is determined on the basis of the average price of the petroleum product at FOB Lavera parity, which means at the average price at which you can buy Eurodiesel or gasoline in this Mediterranean port loaded onto a ship.

To that is added $43 per ton for gasoline and $64 per ton for Eurodiesel plus a certain correction factor.

According to Rakić, what is striking here is that for determining the wholesale price of fuel in Serbia, which is obtained by NIS importing crude oil through JANAF and refining it at the Pancevo Refinery, the price of crude oil on the world market is not used, but the price of derivatives in Italian port, although no one in Serbia imports fuel that way.

“Before, NIS made calculations based on the prices of crude oil, and now derivatives. This is why private gas stations are surviving and waiting for better times and a free market. And he doesn’t exist, because we have one dominant player and whatever retail price he sets, we have to as well. If we put it higher, we wouldn’t sell anything”, he notes.

He also points out that there was a huge jump in the cross-border sale of Eurodiesel due to agrocards.

“The state allowed Eurodiesel to be purchased for 179 dinars at NIS pumps and regardless of the size of the farm, 60 liters per day can be purchased. People from Bosnia and Herzegovina take those cards from their friends and pour them at the pumps along the border. They brag about how fuel sales have increased, and that is cross-border sales”, says Rakić, adding that in those areas, private pumps cannot sell anything because of this.

Rakić also expects that the retail price of oil derivatives will not be increased due to the increase of the margin by two dinars, but that the NIS will simply reduce the wholesale price.

Nebojša Atanacković from the Association of Employers of Serbia believes that increasing the margin by two dinars is a decision in the right direction, but that it does not allow pumps to survive.

“The main problem is the uncertainty of what will happen to the price of fuel.” We are waiting for Friday at three o’clock to see how much the fuel will cost. You never know if getting a fuel tank will pay off or not. The most important thing for a businessman is to be able to assess the situation, and like this, from Friday to Friday, they should see how much fuel they will buy that will last until the following Friday”, Atanacković says.

He adds that until now almost half of the margin went to card payment commissions, which amount to 1.6 percent or between three and 3.5 dinars, depending on the price of fuel.

He also warns that people give up their jobs because they can’t take it anymore, because all costs have to be covered from that margin, and they get the wholesale price of NIS for delivery to the refinery, while the cost of fuel transportation falls on the retailer, Danas writes.