The fuel ordinance, harshly criticized: “A totally insignificant reduction”. How much does the body that gave a negative opinion to the project think the price of fuel will decrease

The measures on the fuel market that the Bolojan Government is preparing to adopt on Thursday by emergency ordinance “will result in a reduction of a maximum of 50 banis per liter of fuel, totally insignificant at prices above 10 lei/liter and will not succeed in stopping the further increase in prices”, warns the Economic and Social Council in the unfavorable opinion it gave on Wednesday to this normative act. The CES opinion is mandatory for the adoption of a normative act, but it has only an advisory role.

In a 13-page document, the Economic and Social Council (CES) gives reasons for the unfavorable opinion it gave on Wednesday to the draft emergency ordinance that the Government led by Ilie Bolojan announced it would adopt in the meeting on Thursday, March 26.

The caps lead to price increases for other products

The Economic and Social Council (CES), which brings together representatives of employers, trade unions and civil society, is an advisory body that facilitates the dialogue with the Government on the legislative measures adopted by the Executive.

In essence, the ESC is the “voice” of organized civil society in the legislative process, ensuring that policy decisions take into account the realities on the ground. Its opinions are binding, but have only an advisory role.

CES believes that the capping measures provided for in the draft ordinance raise significant problems of principle and applicability.

“Generally speaking, on the merits, we draw attention to the fact that, in the proposed form, by introducing a ceiling on the commercial surcharge for gasoline, diesel and the raw materials used to obtain them, the project violates the fundamental principles of the market economy, through a major intervention of the state in the economic mechanisms. This capping mechanism has become an instrument adopted by the state usually in crisis situations, thus placing a significant and disproportionate burden on economic operators”, it is stated in notice

The measure ignores economic realities and fluctuating operating costs influenced by external factors and substitutes the mechanism of price formation with an administrative decision.

“Similar experiences in other countries, but also at the national level, for other product categories, have shown that caps lead to significant dysfunctions and even price increases for other products, ultimately affecting the very consumers that the state claims to protect,” CES warns.

The fuel price at the pump, CES continues, is strongly influenced by the fluctuations recorded by oil barrel quotations on the international market, currently affected by a geopolitical situation, and the military and political developments in the area are difficult to anticipate, and there is a risk that the supply will be affected for a long period.

“Such a scenario, combined with the measure of capping the commercial addition, creates a situation of increased vulnerability for the fuel production sector that could face high operational costs, difficult to sustain in the context of a capped margin, or difficulties in accessing the raw material necessary to obtain energy products. Thus, the proposed measure does not only represent an interference in the market economy, but may endanger the supply of fuels at the level of the entire economy”, says the body.

No real benefits for consumers and businesses

The measure of capping the commercial surcharge does not respond to the declared objective of protecting the final consumer and does not create the conditions for an effective reduction in the selling prices of gasoline and diesel, CES claims.

“On the contrary, in the absence of clear and functional economic mechanisms, the proposed intervention has a limited impact or potentially contrary to the intended one, without generating real benefits neither for the final consumers nor for the business environment”, the opinion states.

In addition, CES emphasizes that the measure is not sufficiently substantiated from an economic point of view and is not accompanied by an adequate analysis of the effects on the entire value chain, which creates the conditions for the emergence of major imbalances, including dysfunctions in supply and affecting the operational sustainability of companies in the sector.

A maximum discount of 50 banis per liter of fuel

The Economic and Social Council (CES) also presents an estimate of the fuel price reduction if the Government adopts the measures proposed in the Emergency Ordinance.

“The measures contained in the draft normative act will result in a reduction of a maximum of 50 bani per liter of fuel, totally insignificant at prices above 10 lei/liter and will not succeed in stopping the further increase in prices”, claims CES.

“Considering that the state collects approximately 60% of the fuel price in the form of taxes”, CES continues, “a proportional reduction in the amount of these taxes is required for a limited period throughout the price formation chain (including producers and distributors) which would lead to a significant positive impact, both for the population and the economy”.

Bankruptcies, followed by the fuel crisis and eventual rationalization

CES also mentions that the price of a barrel of oil had a maximum of the last 5 years in March of 2022 ($130-139 per barrel), but the taxes charged by the state were not increased to this level.

“The unilateral limitation of the commercial surcharge by 50% only for the distribution chain will lead to the cessation of activity of some distributors who will no longer cover their costs, followed by a fuel crisis and a possible rationalization, given that Romania fully covers the production of gasoline and only in the case of diesel turns to imports”, warns CES.

The CES also says that the emergency restart of refineries whose activity is stopped for various reasons is required.

All the effort is moved to the private environment

In supporting the effort to overcome the fuel price crisis, there is no solidarity between the private and state sectors, CES also observes.

“Through this draft law, only economic operators are obliged to reduce their commercial surplus, there being no correlative state measure, namely the reduction of fuel excise duty and VAT. In this way, all the effort is shifted to the private sector, the state not participating in any way in this effort. For example, Italy reduced the excise duty on diesel and gasoline by 25 cents/l, and on LPG by 12 cents/l”, says CES.

The council also warns in the opinion that “there is no assessment of the impact on the price of fuels of limiting the commercial surcharge to no more than 50% by economic operators”.

“The draft law limits throughout the crisis situation on the crude oil and/or petroleum products market the commercial surcharge for gasoline, diesel and the raw materials used to obtain them, to no more than 50% of the average commercial surcharge practiced in 2025 by each economic operator, without an assessment of the price drop”.

At the same time, “the elimination of the Additional Business Income Tax (ICAS) during the entire period of crisis on the crude oil and/or petroleum products market is not regulated.

“The price of fuels affects all sectors of the national economy, and the additional tax is transferred to the final price of fuel,” says CES.

Also, “excise duty reimbursement for the food industry is not regulated: food industry operators carry out transport on their own account, and the cost of fuel directly influences the price of products on the shelf”.

The reduction of the bio component in gasoline from 8% to 2% could attract an infringement

CES also draws attention to the provisions introducing a substantial derogation from the obligation to mix biofuels in gasoline, by reducing the threshold from 8% to a minimum of 2%, during the crisis situation.

“First of all, the measure is incompatible with the European energy and climate framework. The obligation to mix biofuels derives from the Renewable Energy Directive (RED III), transposed into national legislation by GEO No. 80/2018. This does not represent an internal public policy option, but an obligation assumed at European level, part of the trajectory to reduce transport emissions. A unilateral derogation, even temporary, requires a solid justification, formal notification to the European Commission and an impact assessment. In the absence of these steps, there is a real risk of violating EU law and triggering an infringement procedure, which affects Romania's credibility in the implementation of climate policies,” CES warns.

Second, the CES continues, the impact on the environment is negative both in the short and medium term.

Third, the intervention produces contradictory economic effects and affects local value chains relevant to a just transition.

“The bioethanol and biodiesel industry in Romania, built on significant investments and integrated with the agricultural sector, risks being destabilized by reducing domestic demand. This means job losses, diminishing the added value created locally and increasing dependence on fossil fuel imports.”

The Economic and Social Council (CES) on Wednesday gave an unfavorable opinion on the draft GEO. Out of 37 votes cast, 34 votes were unfavorable, 2 favorable with comments and 1 vote was favorable. The CES opinion is mandatory, but has only an advisory role.

Bolojan promises a new set of solutions next week

The government announced that the Emergency Ordinance on the fuel crisis will be adopted in Thursday's meeting. “Following today's discussions in the Tripartite National Council for Social Dialogue, the Ministry of Finance will make some changes that it will announce this evening,” the Government announced.

The Ministry of Finance has not yet announced the changes to the draft GEO approved by the CES. The government meets on Thursday at 11:00 a.m. to adopt this first emergency ordinance.

Prime Minister Ilie Bolojan stated, on Wednesday, that they are working “seriously” on support measures to ensure correct behavior on the fuel market, noting that the additional revenues obtained from VAT, as a result of fuel price increases, will not remain in the budget, but will be introduced into a financing scheme.

“In the first meeting of the Government we will approve an Emergency Ordinance that will allow intervention in the market and ensure the security of supply for citizens and the economy, and next week we will come up with a new set of solutions”, said the Prime Minister.