Poland's Fuel Prices Get a Breath of Fresh Air with President Nawrocki's New Bill

In a bid to ease the burden on Polish consumers, President Karol Nawrocki has submitted a bill to the Sejm aimed at temporarily capping fuel prices and reducing company margins. The proposal, which has been met with a mixed response from industry experts, could lead to a reduction in fuel prices of around PLN 2 per liter, potentially lowering inflation by approximately 1.2 percentage points.

The bill would allow the Council of Ministers to take action in the event of extraordinary disruptions on the fuel market, such as sharp increases in fuel prices. It defines refining, import and sales margins as fixed monetary amounts rather than percentages, making it possible to separate margin controls from fluctuations in commodity prices.

The proposal would also expand the circumstances under which a maximum price for liquid fuels at filling stations could be imposed, and would allow excise duty on fuels to be reduced by regulation in response to a crisis on the fuel market. A temporary exemption of retail sales of petrol, diesel and biocomponents from the retail sales tax would also be introduced.

According to calculations presented in the bill's explanatory memorandum, a reduction in fuel prices of around PLN 2 per liter could lower inflation by approximately 1.2 percentage points. This could bring inflation close to or below the National Bank of Poland's inflation target of 2.5 percent.

The bill would remain in force for no longer than one month at a time, with the possibility of extensions for subsequent periods, but for no more than 12 months in total. A reporting system covering refining margins and administrative penalties for applying refining, import or sales margins above the maximum level specified in the regulation would also be created.

Overall, President Nawrocki's new bill aims to provide relief to Polish consumers by temporarily capping fuel prices and reducing company margins, while also introducing measures to prevent price gouging and ensure fair competition on the fuel market.