UNKCG warns of risk of fuel supply disruption in Montenegro, some gas stations already without fuel

The Association of Oil Companies of Montenegro (UNKCG) has warned that there is a serious risk of an interruption in the fuel supply to Montenegro, because fuel prices, especially Eurodiesel, are 30 percent higher than the current prices.

"Vijesti" unofficially learned that some gas stations have already run out of fuel, and that most of the others will have problems starting tomorrow.

"The Association of Oil Companies of Montenegro expresses serious concern regarding current developments in the global oil and oil derivatives market, caused by the escalation of geopolitical tensions and instability in the Middle East, which are already having a strong impact on the growth of energy purchase prices on the international market," the Association announced.

They point out that at this moment, the purchase prices of petroleum products on the international market are already significantly above the maximum retail prices prescribed by the current Regulation in Montenegro.

"Today, fuel is sold on the domestic market at prices that are up to 30 percent below prices on the stock exchanges, which means that companies are operating at a net loss. The problem is the existing Regulation that calculates maximum retail prices, which in conditions of sudden and pronounced market disruptions becomes a limiting factor for the continuity and regularity of supply, and does not follow the dynamics of changes on the international market. In such circumstances, the difference between purchase and sale prices is rapidly increasing, which inevitably creates serious financial losses for companies and leads to disruptions in supply chains. If the current conflicts and geopolitical tensions continue, and the rise in energy prices persists, it is realistic to expect that the financial pressure on companies operating on the Montenegrin market will become unsustainable tomorrow," it was announced.

In such a scenario, they add, there is a serious risk that the continuity of market supply will be jeopardized, which could have far-reaching consequences for the economy, traffic, tourism, and the daily lives of citizens.

"Oil companies in Montenegro operate in a highly regulated environment and continuously ensure a stable supply of energy to the market, with the state generating significant revenues through excise duties, value added tax and other fiscal obligations arising from the sale of petroleum products. The increase in the purchase price will lead to an increase in VAT collection on fuel imports, which creates the conditions for corrections of other fuel taxes. UNKCG believes that it is in the interest of citizens, the economy and the state that the regulatory framework is flexible enough to respond to exceptional circumstances on the international energy market."

The UNKCG called on the competent institutions to urgently consider the temporary deregulation of the existing model for setting prices for petroleum products, including a possible reduction in excise duties, which they have at their disposal, which would enable a faster response of the system to sudden market changes, with the aim of regular supply and protection of the market from inflationary influences.

"Without a timely reaction from the regulator, the continuation of this trend could lead to serious disruptions in the fuel market, and ultimately endanger the sustainability of the business of oil companies that provide supplies to the Montenegrin economy and citizens. UNKCG remains open to dialogue with the Government of Montenegro and the relevant institutions in order to find a sustainable solution that will preserve market stability, security of supply and consumer protection," the statement reads.