The Ministry of Energy discussed the prices of fuel

On February 15, 2018, the Ministry of Energy and Coal Industry of Ukraine held a meeting of the interdepartmental working group on the functioning of the oil products market and development of the oil refining industry.

The main topics for discussion were the activation of the working group in monitoring the functioning of the oil products market and reviewing the components and mechanisms of fuel pricing.The meeting was moderated by Igor Prokopiv, Deputy Minister of Energy and Coal Industry of Ukraine, with the participation of representatives of the Antimonopoly Committee of Ukraine, the Ministry of Agrarian Policy, SE MASMA, Ukrgazdobychi, Ukrspettransgas, Ukrnafta, Psyche, Oil and Gas Association of Ukraine, Ukrainian Liquefied Gas Association, as well as other experts and industry associations.

Within the framework of the meeting, the Oil and Gas Association of Ukraine made a report on the components of the price of oil products and demonstrated the pricing mechanism taking into account the recent changes in the exchange rates, quotations of petroleum products and world oil prices.

President of Ukrainian Oil & Gas Association, Dmitry Kulik drew attention of the meeting participants to the fact that taxes account for 40% of the price for gasoline and 33% for the price of diesel fuel, and the excise duty is paid in euros. With regard to the mechanism of pricing, the expert also explained the effect of a temporary lag between changes in world oil prices and changes in prices for filling stations. This gap includes the time for the realization of the formed fuel stocks by the operator of the gas station and the time for delivery from the plants to the tank farm. Thus, retail prices smooth out the sharp changes in the world oil price market and the currency exchange rate jumps, and as a result — the decrease and increase in retail prices is delayed. Retail prices for petrol stations for A-95 and diesel fuel increased from August to the end of January 2018. by 25% and 30%, while the purchase prices increased by 29% and 40% respectively (Fig., Dynamics of world prices, exchange rates and prices for filling stations). That means that retail prices for gas stations in February 2018 began to decline, not reaching its peak. Dmitry Kulik also noted that after lowering retail prices in early February 2018, by 50 UAH kopecks, we can expect another wave of decline in the cost of gasoline and diesel fuel in retail by another 1 UAH over the next two weeks.

As part of the revitalization of the working group on the functioning of the oil products market, the Oil and Gas Association of Ukraine made proposals that would help create transparent and equal conditions for the functioning of the market, namely:

• reclaim the state control over the quality and turnover of manufactured and imported products;

• Make necessary amendments to the Tax and Customs Codes regarding the modernization of the Electronic Fuel Administration System and its synchronization, licensing of activities for production / sale / storage of petroleum products, increasing transparency of public purchases of petroleum products;

• Draw the attention of the Antimonopoly Committee to the regional oil products markets, which, according to experts, have been partly monopolized.

President of the Oil and Gas Association of Ukraine Dmitry Kulik also noted the importance of implementing a program to combat illegal gas stations / gas stations at the national level, with the development of additional mechanisms to effectively combat counterfeiting, smuggling and falsification of oil products in the regions.

The Ukrainian Oil & Gas Association is the industry association representing the interests of the largest players in the oil and gas market. Today, the Association consists of 14 largest wholesale, retail, producing and processing companies representing national, international, private and state-owned business, including: gas station networks of WOG, ОKKО, Shell, AMIC Ukraine, Socar, KLO, Parallel, SunOil, Glusco, Gastron, Ukrgasvydobuvannya, Tsentrnaftogaspostach and wholesale suppliers as BNK-Ukraine and Alliance-Oil Ukraine. Members of the Ukrainian Oil & Gas Association cover approximately 50% of retail trade and almost 80% of the import of petroleum products.