Fuel mark-up and competition: what is happening in the Georgian fuel market

Read: 375     14:00     19 Май 2022    

The Competition Agency checked the state of the imported fuel market and found out the reason for the high gasoline prices in Georgia.
In early May, Georgian Prime Minister Irakli Garibashvili instructed the Economic Council to deal with the cause of high fuel prices.
According to the Agency, in the period from January to April, 385,678 thousand liters of gasoline and diesel were imported to Georgia by 22 companies, while the share of the three largest companies in fuel imports was 69%.

Where does the fuel come from in Georgia

A third of all fuel to Georgia in January-April 2022 was imported from Romania, 24.1% – from Bulgaria. Russia was only in third place. In total, 17.8% of the total volume of gasoline and diesel was imported from this country.
The overall picture of the share of fuel importing countries to Georgia is as follows:
Romania – 31, 2%
Bulgaria – 24.1%
Russia – 17.8%
Azerbaijan – 14.7%
Turkmenistan – 12%
Other countries – 0.2%.
At the same time, 64.1% of all imported fuel is gasoline, of which 38.4% is the regular brand, and 35.9% of imported fuel is diesel.

How the price is formed

In general, the price of fuel at gas stations is formed by the sum of several factors at once – customs price, excise duty, VAT, operating costs, and margin.
The Competition Agency checked the formation of the price of fuel imported from Russia, Bulgaria and Romania in three major companies and found out that in the retail price the margin for fuel from Russia, the cost of which is the lowest compared to the cost of fuel from Romania and Bulgaria, in April amounted to 0.65 lari per liter.
As for the mark–up on fuel from Romania, it was 0.16 lari per liter, and the mark-up on fuel from Bulgaria was 0.2 lari per liter.
According to the Agency, thus, at different cost prices, fuel imported from all three countries is sold at the same price.
What to expect from prices?
The Competition Agency notes that in May, the trend of rising oil and fuel prices was recorded on international markets, and prices practically approached the peak recorded in March.