The Polish government is not planning to return to the CPN (Cena Paliwa Niskiego) subsidy package but instead seeks market-based solutions to reduce fuel prices, according to Energy Minister Miłosz Motyka. With wholesale prices rising sharply since early July, there is a growing risk that petrol and diesel at the pumps will soon exceed 7 złoty per litre.
Minister Motyka stated in an interview with Radio Kraków that the current increase in pump prices is not a consequence of ending the CPN program but stems from the rebuilding of warehouse stocks and strategic reserves. He clarified his earlier remarks about a possible return to protective measures in case of an escalation between the United States and Iran, emphasizing that for now the focus is on market mechanisms.
Market mechanisms instead of direct subsidies
– Today we are not talking about a return to the CPN package. We are primarily talking about how to bring about lower fuel prices through market mechanisms – said Minister of Energy Miłosz Motyka. – What currently affects prices at the pumps is the rebuilding of warehouse stocks and strategic reserves – he added.
The government has limited ability to influence final fuel prices, as a large portion depends on global markets. The final price per litre includes the cost of crude oil, refinery margins, excise tax, VAT, and distribution margins. While the government can adjust some of these components, it cannot control them all. This makes the declaration of a 'market-based’ approach more cautious than a simple return to an outright subsidy program.
Rising wholesale prices and VAT increase
Since the CPN program ended on July 1, diesel prices on the European market have jumped by 11 percent. Orlen, Poland’s largest refiner, raised its wholesale diesel price by 26 groszy per litre over the past week, reaching the highest level in over a month. Wholesale petrol 95 increased by 15 groszy per litre, to its highest since late May. At the same time, the VAT rate on fuel was raised from 8 percent to 23 percent at the beginning of July, adding further upward pressure.
As a result, the probability of pump prices rising well above 7 złoty per litre has increased significantly. Analysts warn that unless global oil prices ease or the government introduces some form of relief, Polish drivers will face higher costs in the coming weeks.
Źródło: WNP.PL, Fot. Shutterstock/Katarzyna Ledwon
