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PM Ciuca: Pump prices for fuel will be subsidised 0.5 RON

July 21, 2022

The price of fuel at the pump will be compensated with 50 bani (0.5 RON), half of this reduction being to be settled by the state, Prime Minister Nicolae Ciuca said on Thursday at the Victoria Palace."The Romanian Government continues to implement measures to protect citizens and the economy from the effects of the crisis we are going through. In order for Romanian citizens and companies to pay less for fuel, we have identified together with the specialists a compensation solution in a fixed amount of 50 bani (0.5 RON) that is applied directly to the pump. In support of the partnership between civil society and the Government, between the Government and the population, as well as the business environment, we have taken the decision to apply this measure, a measure that has also been adopted by other countries (...) we are talking about Spain and France," Ciuca said.The prime minister added that the measure involves both the responsibility of the government and the responsibility of companies in the oil industry."Half of this reduction will be settled by the state, through a mechanism that will be implemented between distributors and select ministries," he said.Nicolae Ciuca stressed that the measure will be applied for a period of three months."The compensation will be highlighted on each tax receipt issued at the fuelling stations. The value of the compensation package for this period will be of two billion RON, half of this money will be insured from the state budget," the prime minister added.The prime minister also said that at the end of the three-month compensation period, the government will consider, if necessary, a new set of measures.At the same time, he noted that the Executive also has at its disposal "a useful tool", namely the ordinance to combat speculative effects."Through these tools we will ensure a high level of protection of consumers against unjustified increases in prices," Ciuca said.The executive's head stressed that the measures envisaged do not affect the investment budget."The measures we take and that are part of an effective mechanism for the next three months. (...) do not affect the investment budget in any way. The government will keep 7% of the Gross Domestic Product for investments, respectively 88 billion RON. At the same time, we will intensify the efforts to absorb the money provided through the European funds, both through the Multiannual Financial Framework and through the PNRR (National Recovery and Resilience Plan)", pointed out Nicolae Ciuca.   President Klaus Iohannis said on Thursday that cutting excise duties on fuel is not possible and that directly capping or subsidizing the fuel price isn't feasible either, mentioning however that Prime Minister Nicolae Ciuca assured him that the amount needed to cover the planned support of 0.50 RON per litre of fuel can be borne by the budget."Cutting excise duties is only apparently within the governments' reach, in reality it is not, because of the European legislation. Excise duties are easy to modify if you want to raise them, cutting them below a certain level is rather not possible. So this discussion stops right from the start and remains just a mathematical theory, so to speak. The other tools available to the government are certainly the national ones: modifying the VAT rate, altering the budget subsidy or resorting to other mechanisms. With the sharp rise in pump prices, the government has with good reason looked into the matter and concluded that it needs to do something, to the possible extent," said Iohannis who attends the EU-Western Balkans Summit in Brussels.The head of the state said that directly capping fuel prices or a significant fuel subsidy are no feasible solutions, "but to the extent possible - and I discussed the subject with the Prime Minister yesterday and he explained to me how he sees the mechanism - to the extent possible, it is correct to do it. So this is where we stand now and the Prime Minister has assured me that this amount can be borne by the national budget from resources the Finance Ministry will identify."  

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