Prime Minister Edi Rama today met stakeholders from the fuel industry to jointly coordinate actions designed to curb any speculations on oil and commodity prices taking advantage of the impact of war.
The ongoing extraordinary situation calls for the government’s direct intervention to freeze the profit margins and make transparency over the fuel prices and that’s why the National Fuel Management Board will be established immediately.
A government’s normative act due to enter into force immediately as part of the efforts to cope with this emergency will define the framework of the limited rights and obligations of the fuel distributors for a two-month period that could be postponed depending on the dynamics of the war.
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Hello and thank you for positively responding to the invitation for this meeting.
In no other case and for no reason called war, this meeting would not have happened because it is absolutely neither the duty, nor the responsibility, nor the possibility of the government in a democratic system where the Constitution stipulates the free market to intervene in the price regime.
But today I believe it is very clear to everyone and I insist that we may differ in our opinions, but we must unite behind facts, namely the fact that our country, like all other countries, is facing the consequences of a war already underway in Europe.
It is a war we neither started, nor can we stop it and neither we nor anyone else knows how long it will last.
But indeed, the war has affected Albania through the power price bill, with the oil price bill and with its impact on all commodity prices.
This is a fact.
Of course, the rising price trend showed initial signals in the second half of last year throughout the world as a result of a very robust economic recovery after the pandemic’s acute phase and as a result of the demand growing exponentially compared to the supply and everyone has witnessed it for themselves.
The initial symptoms of the energy crisis were shown several months ago.
Of course, those who are more influential in this society can afford protesting over the oil price, but the power crisis is the most serious one and is being considered as the new pandemic.
I would keep reiterating this since this government has already announced and has warned about it since the very onset, when many promptly reacted, claiming this was a trick or a maneuver and that no crisis was imminent. With the whole world already gripped by the crisis, we are committed to provide a shield to protect household consumers and small businesses to make sure that they do not bear the brunt of crazy rise in prices.
Let everyone learn today if the electricity price will remain unchanged from 52 euros per megawatt hours last year to 550 euros per megawatt hours in the international market, from where we are forced to import for all the reasons we are aware of, we will need an extra $640 million by the end of the year. The additional amount of $640 million is the value of a eurobond. What would we need this amount of money for? We would need it to protect households and small businesses. This is what this government is doing and one can both laugh and cry at the same time when this is taken for granted and many say: “You keep telling us about the electricity price, but take a look at the oil prices.”
I keep talking about the electricity price, because if we were to do what we are actually doing and, I am pretty sure, other countries will be doing by increasing the electricity price, we would actually affect the society’s most vulnerable part with people who own no cars. We would affect retirees. We would affect farmers, as family heads in this case. We would the households under the social and economic benefit scheme. We would affect hundreds and thousands of people and we would affect the engine of employment and self-employment, small business. In no way are they going to affect them. We will do our utmost efforts to affect them.
If the price of energy is to return to where it was before the war, we need an extra amount of 295 million euros. Why am I saying all these? I am saying all these to shed light into this issue and make it clear to everyone we should not focus on the oil prices only. It is true that our oil price structure includes extra burden that is not applied in other countries and that’s why the oil price is higher. However, no zero tax rate is applied on small businesses in other countries. Other countries apply no zero VAT rate on small business. Other countries apply higher rates of personal income taxes and a symbolic personal income tax rate is levied on monthly wages up to one million lek. No such low rates of social and health insurance contributions are applied in other countries in the region. This means that other countries apply a higher fiscal burden on households, individuals and small businesses.
No governments in any other countries allocate $ 45 million annually in state budget money to compensate the power bill for families in need, retired people and other social categories. And this figure is much higher due to the ongoing war and therefore it is important that everyone is aware that here, as it has always been the thread of our reasoning as a government, whoever can afford most, will hold the heaviest burden and who owns a car will carry more burden than the one who doesn’t and lives under a minimum wage, since many here usually refer the monthly salary of 30,000 lek as the average wage. The minimum wage in Albania is 30,000 lek and this is not the average salary. Those who drive BMV X5 and take to the streets and roads to block them do not earn a monthly salary of 30,000 lek. We will definitely explore ways to compensate farmers for the rising fuel prices. We have decided to provide tax-free oil to farmers. And we will return the additional revenues from rising prices to farmers and we won’t use this money to support other projects.
To cut it short, since the action plan will be announced by the end of week, as we already announced at the joint press conference together with the Minister three days ago, together we have come together to find ways to tackle the high fuel prices.
With all due respect, I think today you should be aware of the fact that you belong to that part of the Albanian society that has to make a sacrifice. It is as simple as that. You should help yourselves by recalling what you used to be before what you are now as each and everyone of you has embarked on this path from nowhere and here you are today. But this is not the time to gain profits. This is the time to resist and this is the time to share your part of burden. It is definitely the government’s duty to share the heaviest burden. But everyone has of course the duty to share his or her part of burden, because this is a war, although, thank God, not with bombs flying over our heads and thank God we are not forced to separate from our families to take up arms, whereas women and children fleeing the country to save their lives and seek shelter elsewhere. Our houses are not being destroyed, but the war is already exerting its impact on our economy, on the household economy in the form of electricity bills and commodity prices and of course you too should bear your share of the burden, because it is impossible that you earn nothing more than what you should earn so that you can go on with helping, supporting and supplying Albanian people. You can earn nothing more than that. And to this end, under these conditions, within 24 hours we will adopt a normative with the power of a law and the government will intervene in the fuel management, supply and distribution, together with you, through a national fuel supply board and we both, the government and stakeholders in this industry, the government representatives, namely the Minister of Finance, the Minister of Infrastructure and Energy, the Director of Tax Administration, the Director of Customs Administration, and the Head of the Competition Authority, will sit with five representatives of the oil distribution sector and in no filling station will be displaced a oil price different from the one approved by the board. If anyone decides to do so, he will be deprived of the filling station. It is as simple as that. This is a war going on. Rules don’t work here. You have already seen and heard for yourselves that I am not a free market ideologist or a supporter of the state as an influencing power in the economy. I just believe that economic freedom is fundamental and I never resort to the theory that the state should act to control prices, because a democratic state doesn’t control prices and it can’t actually do so, even it would wish to and any attempt to do so in any country around the world hasn’t worked. However, these actually are peacetime stories. This is wartime and I ask for your solidarity and I ask for your commitment nicely, whereas the law will stipulate it as mandatory. There is no other way for us. You know it better than I do. Others may know less than we do, as we deal with this business on a daily basis, and they do not know that what worries us most and what really threatens us more is not the price, even the current crazy prices. What really threatens us and everyone else is the shortage of fuel. It could be easy for one to call on you to impose sanctions or prices, but such a move, which is also being made in other countries too, could lead to a point with the oil and fuel totally missing. It could lead us to a point of electricity shortages. Because, as the Minister clarified in the previous press conference, the problem we face, when accessing the energy market because of drought, is not the price only. There are projections anticipating that the electricity price will soar to as high as 1000 euros per megawatt hour! However, the worst is that you may not secure this commodity. Therefore, in addition to the transparency over the price, we won’t decide arbitrary prices, as we know quite well its consequences. This would lead to a boom in bankruptcy filings and we would then face total shortages. But we will make transparency over oil price on a daily basis so that citizens can clearly see that every cent is there not to earn profits, but to ensure normal continuation of work and, on the other hand, the Minister will focus on the factual emergency oil stocks.
In the meantime, we have launched intense work and this was also one of the reasons why we visited the crown prince of the United Arab Emirates, precisely to ask for more opportunities. This was also the reason why the Minister of Foreign Affairs visited Saudi Arabia and why we maintain contact with both these countries, which are key countries. I would wish that we work together, united behind a common sense of patriotism that it is now or never. None of you faces prospect of lacking bread in your families, none of you risks losing everything, but each and every one of you has an obligation, I don’t know for how long, but probably a month, or two and even three months, because it would be a completely different story should this is going to last more than three months.
To conclude, through your association I believe that whatever mechanism you have in place, you should name five industry representatives to join the National Fuel Supply Board. The Board will convene tomorrow afternoon. Given that it would be the first meeting, I think it would be best for everyone to attend in person and the upcoming meetings may take place via online platforms. It is neither the goal nor the government’s tendency to impose commodity prices, as it wouldn’t work and we know it quite well. However, the government will ensure full transparency over the fuel prices, will listen to entire argument about the price structure and will have its final say about price at this stage, while seeking to make sure that oil supply is guaranteed and at a price with the suppliers income only to make sure that they resist without incurring losses and earn profits and the profit margin will be frozen according to the decision due to be made by the board. Any distributor that applies a price other than the one decided by the Board will be stripped of the business license and will be deprived of their filling stations. This will be stipulated by law through the normative act due to enter into force tomorrow and the normative act will stipulate that the filling stations will be nationalized temporarily.
Meanwhile, I would like to inform you that the government, specifically the Ministry of Energy and Infrastructure will commit to building its own emergency oil stock through the Albpetrol as the government stakeholder. This is just to inform you. We will be 100% available and ready to help should the fuel supply situation aggravate and you should also be 100% ready and available to help us so that we all can live up to this challenge.
This is an extraordinary situation, which – thank God – lacks bombing, destruction and horrible human pain and physical war wounds, while everything else is a consequence of this war and we will cope with it being aware and by setting the example, as the government is doing after taking over to pay 80% of the portion of the electricity bill for every household.
This is a staggering expense and God forbid it if we were to do the opposite, namely increase the electricity price and remove the circulation tax from the oil price. In other words, if we were to rest all this burden on every Albanian citizen, including the most vulnerable ones, a move that would be psychologically overwhelming just to provide relief to another segment of the society that can afford more.
However, this part of the society that can afford more opportunities should in no way become a victim of speculative and abusive prices with oil prices changing every second at filling stations as if it were the stocks and share prices at the Dow Jones and not price display boards at fuel filling stations. It is senseless that a supplier sells fuel at 240 lek, another at 260 and a third one at 270 lek per litre. This is something that can probably happen at normal circumstances with everyone allowed to determine prices as they please as this is the system we have chosen. We are not under the communist regime, but this is intolerable and we won’t tolerate it. Every driver stopping at a filling station should precisely know how much he or should pay and be assured that they are not paying so that someone can take advantage of the war and earn money from it. This is what we should guarantee, nothing more and nothing less. In no way shall we embark on the dead-end path of imposing restrictions on suppliers and leading them towards bankruptcy.
Thank you very much! I hope you will kindly, fully aware and patriotically accept this decision. For this reason, at this point, everyone will be given the floor during the Board meeting.
