Economy Minister, Davor Filipovic, said on Monday that the wholesale price of fuels would continue to be capped for the next two weeks "so that major oil market stakeholders, including Ina, would bear the brunt" of diminishing margins amid exploding prices. Earlier on Monday, the government decided to fix wholesale prices of fuel, which effectively capped maximum retail prices as well.

“The government aims to protect Croatians and help the economy, so fuel prices at off-motorway filling stations remain the same as in the past two weeks, namely 13.08 kuna (€1.74) for a liter of diesel and 13.50 kuna (€1.80) for a liter of Eurosuper 95 petrol,” he added.

Filipovic said that fuel prices at motorway filling stations would be reduced to 14.28 kuna (€1.90) for diesel and 13.83 kuna (€1.84) for petrol.

Without offering any real explanation for the move, Croatian government last month decided to restrict prices at all petrol stations except the ones located along motorways, presumably because in the summer months the vast majority of motorway users are foreigners arriving to the country for holidays, and revenues from their spending is essential for the country’s GDP.

With the latest decision, diesel will cost 9 percent more on the motorway while petrol will be more than 2 percent more expensive than prices regulated at off-motorway stations.

“We have been continually communicating with retailers. In the past two weeks Ina did not increase its wholesale price, and small distributors on the most part sold their own stocks. Therefore, we can say that in the past two weeks they did not earn as much as they had planned,” said Filipovic, adding that in the next two weeks, the national oil company Ina would “take on most of the burden and would not increase its prices for retailers to make it easier for them to operate.”

Small distributors voiced concern that the government’s price caps would eat away their profit margins, forcing them to close businesses. But Filipovic did not appear concerned, talking instead about the profits they had made in previous years before the global prices of fuel surged.

“There are 40 small oil distributors, and in 2021 they generated total sales revenues of almost 3.5 billion kuna (€465 million), and made a profit of 133 million kuna (€17.7 million). They operated equally successfully in 2020,” Filipovic said.

“All of that should be taken into account,” Filipovic said, without explaining why, adding that “it is necessary to take a look at the bigger picture because we are in a delicate situation,” Filipovic said. “Without the government’s intervention, the price of diesel would now be more than 16.00 kuna,” Filipovic calculated.

When asked if he thought small distributors were wrong to complain, Filipovic said that the government’s goal was to limit wholesale prices. “The situation is difficult for everyone, small distributors are not used to this because their businesses have been successful in the past,” he said.

“These past two weeks and the next two weeks will certainly not be easy for them, but I believe that we will all successfully overcome this situation together,” Filipovic said.

Also on Monday, association of small distributors said that the losses caused by government’s price capping from early June to early July have cost them nearly 21 million kuna (€2.8 million). They warned that closing down small petrol stations was “practically inevitable,” and that the government’s price capping might lead to a shortage of fuel in the middle of the peak summer season.

(€1 = 7.52 kuna)