Portuguese government puts cap on fuel prices

22 Oct 2021

A law that permits the government to curb margins in the marketing of fuels comes into effect on Friday.

The law revises a number of decrees that set the general principles related to the organisation and functioning of the National Petroleum System. The law now states that “maximum margins” may “be defined for any of the activities in the value chain of simple fuels or bottled LPG, being set by order of the members of the government responsible for the areas of economy and energy, upon the proposal of the Energy Services Regulatory Authority and after hearing the Competition Authority”.

In addition, the law also states that “the maximum margins shall be limited in time”.

During a press conference, the minister for the Environment, João Pedro Matos Fernandes, said the law intends to “give the government a tool so that, when margins on the sale of fuel and gas cylinders are unusually high, and without justification, it can, by decree, limit those margins”.

The fuel sector’s associations have criticised the initiative, which has blamed the government of wanting to take attention away from the impact of taxes on fuel prices.

Furthermore, opposition parties also showed concern over the rise in energy prices, claiming the solutions submitted up to now by the government are inadequate.

Social Democratic Party (PSD) member of parliament Afonso Oliveira is urging the government to keep its promise from five years ago, when the additional tax on petroleum products (ISP) was implemented, and it said the extra tax would be scrapped with the price hike.

In addition, the CDS-People’s Party Member of Parliament João Almeida said the tax burden had to be lightened on fuel and electricity prices: “It is in taxes that we need to move immediately so that this crisis is not tragic for families and companies,” he stated.

However, Socialist Party lawmaker Miguel Costa Matos said that it makes sense to control the margins and not reduce the ISP: “Those who pay [the ISP reduction] are all of us, even those who do not use a private car, but they pay above all the younger generations – my generation – because we take resources away from decarbonisation to encourage the consumption of fossil fuels,” he said.