Fears over high oil prices allayed

Greek government officials yesterday expressed concern over the continuing rise in fuel prices but ruled out any above-inflation price hikes in local electricity tariffs due to the international oil price rally. Deputy Development Minister Giorgos Salagoudis said that the costs of the Public Power Corporation (PPC) do not seem to have been so far affected by rising petrol prices in order to justify a hike in tariffs above the government’s 3.2 percent inflation forecast for 2005. «The rise (in electricity tariffs) will be at inflation levels, on the condition that petrol prices do not get much worse,» Salagoudis said. Oil prices hit a record high earlier this week, falling just short of $60 a barrel with local petrol costs showing an increase of just over 20 percent from last year. In a bid to soften the blow, Greece’s gas station owners called on the Finance Ministry on Tuesday to lower value-added tax on fuel prices. Salagoudis pointed out that Greece is more affected by volatile fuel costs than its European Union counterparts due to the country’s failure to switch to alternative energy sources in the past few years. «The European Union of 15 countries has reduced its dependency on petrol by 50 percent while we are still at the same levels,» he said. More upward pressure on fuel prices is on the cards as Greece will be obligated to up the special tax applicable on petrol prices by 2010 in order to bring the tax in line with European Union guidelines. Government sources say that the hike could come as soon as this autumn. Salagoudis played down concerns on the upcoming tax increase saying that it is not the right time for such a move.

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