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SLOVAK FREIGHT HAULING ASSOCIATION ASKS THE ANTITRUST OFFICE TO INVESTIGATE SLOVNAFT

Fuel discrepancy angers group

FREIGHT hauling association ČESMAD has accused Slovnaft of deliberately selling diesel fuel cheaper in the Czech Republic than in Slovakia. The haulier group has asked the Slovak antitrust office to investigate Slovakia's most prominent retail seller of fuels.
ČESMAD Secretary General Katarina Vinceová recently told a news conference that the Slovak refiner routinely sells diesel at Sk2 more per litter (5 cents) than in the neighbouring Czech Republic.
"The association has based its calculation on a comparison of the sale price of diesel adjusted by value added tax and the excise tax," said Vinceová.

FREIGHT hauling association ČESMAD has accused Slovnaft of deliberately selling diesel fuel cheaper in the Czech Republic than in Slovakia. The haulier group has asked the Slovak antitrust office to investigate Slovakia's most prominent retail seller of fuels.

ČESMAD Secretary General Katarina Vinceová recently told a news conference that the Slovak refiner routinely sells diesel at Sk2 more per litter (5 cents) than in the neighbouring Czech Republic.

"The association has based its calculation on a comparison of the sale price of diesel adjusted by value added tax and the excise tax," said Vinceová.

Slovnaft denies any wrongdoing. Slovnaft spokeswoman, Kristína Félová, explained her company's position to The Slovak Spectator.

"The differences between individual national markets are the result of unique structures within those markets - different distribution channels, tax rates, and development of currency rates," she said.

"The fact that retail prices in the Slovak and Czech Republics differ is because of their different market structures and in part by different rates of fuel taxation."

Félová told The Spectator that the Czech oil market is not consolidated, unlike the Slovak market. Dominated by state-run companies such as ČEPRO and Unipetrol, Czech refineries do not reflect developments on the world oil market.

"Slovnaft's prices are nothing other than a direct consequence of this," stressed Félová. She said that Slovnaft is a victim of the current imbalance between oil supply and demand on the world market.

In response to ČESMAD's request, the Slovak antitrust office says it is presently powerless to influence Slovnaft.

Miroslav Jurkovič, spokesman for the state's antitrust office, told the SME daily that it could not take action against Slovnaft's prices, even if they were inappropriately high.

"Although the Antitrust Office considers Slovnaft a dominant player in the retail fuel market, we have power to take an action against such a company only in case of inappropriate trade conditions, discrimination, or bindings of sale to unconnected commitments," Jurkovič said.

The Finance Ministry, however, does have the power. If the ministry decides to regulate Slovnaft it could do so by announcing that Slovnaft sell its fuel at fixed or maximum prices.

"If the Finance Ministry shifts its position on regulation Slovnaft will adjust to it and we will respect it," Félová told The Spectator.

For its part, the ministry is keeping an eye on the situation.

According to the daily SME, Mikuláš Gera from the ministry's press department said that the Finance Ministry closely monitors the development of the oil market.

"If, after proper analysis, the office comes to the conclusion that lack of competition is threatening the market, it will take action," Gera said.

Slovak Finance Minister Ivan Mikloš believes that current market conditions are the result of a merger between Slovnaft and Benzinol, which the Antitrust Office approved in 1995.

Miklos is critical of such mergers. "The establishment of singularly dominant companies on the Slovak market backfires," he said recently.

Contrary to Slovakia, the Czech antitrust organisation took strong action in June when it levied fines against Czech fuel concerns amounting to CZK313 million for illegal cartel agreements. These agreements had enabled fuel vendors to unfairly raise prices by one Czech crown.

Economist Róbert Prega from Tatra banka bank told the daily SME that an administrative regulation would not be a solution.

"I cannot imagine how such an administrative action would be carried out from a technical point of view.

"If prices changed once a year, I think we would be in the same situation as we are now," Prega said.

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