PRAGUE, April 2 (Reuters) - The Czech government agreed to cap fuel retailers' margins and lower the excise tax to limit fuel price rises, Prime Minister Andrej Babis said on Thursday. Other
Czech, Romanian governments approve measures to stem fuel price rise
Central European Responses to Fuel Price Surge
PRAGUE/BUCHAREST, April 2 (Reuters) - The Czech government agreed to cap fuel retailers' margins and lower the excise tax to limit fuel price rises, Prime Minister Andrej Babis said on Thursday, while Romania's ruling coalition is set to cut excise duties on diesel on Friday.
Other governments in central Europe have also taken measures to limit the impact of a surge in oil prices caused by the Iran war.
Czech Government Actions
Babis told a news conference that there was "chaos" resulting from a lack of coordination among countries in Central Europe, which have been adopting their own measures in response to the energy crisis.
Price Controls and Tax Reductions
He said his government will start price controls from April 8 by capping the margin on diesel and gasoline at 2.50 crowns ($0.12) and lowering the excise tax on diesel - currently at 9.95 crowns per litre - by 2.35 crowns.
A maximum price will be set daily under the system, he said.
"We think this is a measure that should fundamentally help everyone, of course citizens, companies and the economy," Babis said.
Romanian Government Measures
Excise Tax Cuts and Market Interventions
Romania's government said in a statement it will cut excise tax on diesel by 0.30 lei ($0.0679) per litre through an emergency decree most likely on Friday.
The country, which has the EU's highest budget deficit, has already capped fuel price markups and limited exports. It is also partially offsetting diesel prices for farmers and transportation companies.
Market Impact and Regional Context
Fuel Price Trends in the Czech Republic
In the Czech Republic, the average petrol price has risen about 8 crowns per litre to 41.60 crowns since the U.S.-Israeli air strikes on Iran on February 28. Diesel is up around 15 crowns at 48.33 crowns per litre, CTK news agency reported, citing data from fleet service provider CCS.
Release of State Reserves
Prague has already released 100,000 tons of crude from state reserves for the country's sole refiner, Orlen Unipetrol, owned by Polish group Orlen.
Orlen and Hungary's MOL are large fuel retailers in the country with refinery systems.
External Pressures and Supply Issues
Besides pressure from global markets, where oil has vaulted past $100 a barrel, Central Europe is also dealing with a suspension of Russian oil supplies to Slovakia and Hungary due to an outage on the Druzhba pipeline in Ukraine, which Kyiv said was caused by a Russian strike on pipeline equipment.
Additional Information
Exchange Rate
($1 = 21.2730 Czech crowns)
Reporting Credits
(Reporting by Jan Lopatka and Jason Hovet in Prague, Luiza Ilie in Bucharest; Editing by Andrew Cawthorne and Tomasz Janowski)
