According to the latest government regulation of fuel prices for oil derivatives, price caps were put for petrol standing at HRK 10.72 and diesel standing at HRK 12.3. Premium fuel prices remain market-driven. If the interventions were not put in motion, petrol prices would amount to HRK 13.02 and diesel to HRK 15.61. Petrol warns this model is unsustainable.

For the past week, Petrol was again under influence of the Croatian government’s cap on fuel prices for oil derivatives. Petrol warns this model is unsustainable. Price caps were put for petrol standing at HRK 10.72 and diesel standing at HRK 12.3. Premium fuel prices remain market-driven. If the interventions were not put in motion, petrol prices would amount to HRK 13.02 and diesel to HRK 15.61.

Government intervention and capping of fuel prices on all Petrol markets made the company operate with negative net income in 1H 2022. Since the Russian invasion of Ukraine took a toll on oil prices, governments started to regulate retail fuel prices. In turn, Petrol has experienced losses as a cap on prices was put below their input prices for certain time periods.

Regulation of electricity and gas prices from September in Slovenia and Croatia are to put further strain on profit. In times of strong inflation, governments have fixed prices for gas and electricity.

Further, Petrol’s subsidiary, Geoplin, which is three-quarters owned by Petrol and state-owned with the remaining part, is currently under a magnifying glass due to the regulation of the prices of gas imposed by the government. From September the regulation imposed by the Slovenian government requires suppliers to sell gas prices at maximum of EUR 0.073 per kWh for households and at EUR 0.073 per kWh for small entrepreneurs. There was recent media information that Petrol’s subsidiary, Geoplin, might need additional capital and liquidity, which you can read here. The calculated loss of c. EUR 100m in this year for two months of gas procured was according to media calculated at price of EUR 200 per MWh. On the other hand, the gas prices stabilized during October and 1M forward price when we look at Dutch TTF stands at EUR 116 MWh. On October 20, a meeting of the shareholders of Geoplin has been held, where all these important decisions were discussed and more information should be available soon.

Gas prices in Europe in MWh

Source: Bloomberg, InterCapital research