Energy Market Regulatory Agency (EPDK) Chairman Hasan Köktaş has said that the EPDK has decided to change the process for the determination and announcement of fuel prices.

Köktaş said they will re-determine the pricing methodology for refineries, distributors and dealers to make these processes more transparent. Speaking to journalists at a fast-breaking dinner in Ankara on Monday, Köktaş explained that they had received many complaints about fuel distribution companies not reflecting global oil price decreases in their fuel prices immediately, even though they are quick to change their prices when oil prices go up. Köktaş added that if the EPDK were to directly determine fuel prices, this would be disadvantageous for consumers in the long run. “We have seen examples of this before. Electricity pricing is one of the most obvious examples of this.”

The EPDK chairman noted they have been working on a new pricing mechanism for a long time adding, “We are trying to establish permanent competition in the sector. We have come to the final stage. We are adopting the method of intervening in the energy prices by using the energy markets as an intervention tool, rather than deciding the prices ourselves. The pricing methodology for fuel will be transparent, from the moment it leaves the refinery to the last minute when it reaches consumers.”

Köktaş stressed that there were three links in the chain -- refineries, distributors and dealers -- adding: “We need to set the pricing methodology for this chain. After this, all of us will see the parameters used to decide the prices, so the majority of these complaints will end at that point.”

Köktaş also commented on fuel distributors failing to reflect decreases in the price of oil in their fuel prices, saying that these companies added their stockpiling costs onto the fuel prices, so the expected decrease does not take place immediately. “As oil prices peaked, the market worked at full stockpile capacity. There is already a stockpiling liability in this business. Increases in oil prices were reflected in the fuel prices immediately. Now oil prices are going down, and you have a stockpiling cost on your hands. I mean, because the players in the market act in accordance with their stockpiling costs. The pace of decreases in oil prices is not reflected in fuel prices.”

Answering a question about why they did not grant Petrol Ofisi (POAŞ), an oil company owned by Aydın Doğan, authorization for a new oil refinery, Köktaş said Diler İnşaat Co. had previously requested to construct an electric power plant at the same site on which POAŞ had sought to establish an oil refinery. “The procedure that the EPDK should follow if more than one company applies for a particular site is not defined. This was the problem in the case of POAŞ. Because of this incident, we have drafted a new regulation to solve this problem, and we are now waiting for it to be approved.”

Köktaş stressed that the production cost-based pricing method for electricity should have been launched a long time ago, adding that it would be advantageous for consumers in the long run, as can be observed in the countries already using this method.

Köktaş said he did not think there would be problems with Turkey’s electricity supply after 2011, as new investments will have begun to play a role by then. He also noted that electricity conservation should not be limited to changing one’s light bulbs, adding that savings in the production and distribution processes was much more important.

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