POUND SOARS ABOVE Alpet,13TL
TURKISH LIRA HITS NEW LOWS AGAINST STERLING, EURO AND DOLLAR CURRENCY WOES SPARK PETROL AND GAS CRISIS AND GRIDLOCK ON THE STREETS SELLERS ACCUSED OF STOCKPILING, ANTI-COMPETITION INVESTIGATION LAUNCHED
THE pound soared above the 13TL mark yesterday as the TRNC this week grappled with a fuel price crisis.
Yesterday afternoon £1 was trading at around 13.3TL, a record high, after Turkey’s Central Bank cut interest rates by two percentage points. The euro and US dollar also reached new highs of around 11.2TL and 9.6TL respectively.
There was traffic chaos on Wednesday across the country as motorists rushed to fill up their tanks after the two fuel distributors, K-Pet and announced they were stopping supplying fuel because of large “losses” due to the devaluation of the Turkish lira. Long queues formed at forecourts, causing gridlock on main roads, and some petrol stations had to close after running out of stocks.
There was also a shortage of domestic gas bottles in shops amid rumours of another price rise and accusations that sellers are stockpiling.
On Thursday many petrol stations were rationing sales of fuel and only selling Euro Diesel and 98 octane unleaded petrol, which is more expensive than 95 octane unleaded petrol.
Under the current pump prices, which were last adjusted on October 6, one litre of 95 octane unleaded costs 7.84TL, while a litre of 98 octane unleaded is 7.99TL. Euro Diesel costs 7.30TL per litre. The prices are around two TL per litre higher than five months ago.
Cyprus Turkish Petrol Station Owners Union head Levent Çağdal said that fuel prices are “automatically” reviewed every 15 days taking into account foreign exchange rates. He said that the next price review is not due until Tuesday, October 26, and that in the meantime sellers are “losing 1TL for every litre of fuel sold”, which they have to import and pay for in foreign currency.
He added that the dollar price of a tonne of fuel had risen in the last 15 days, while at the same time the Turkish lira has lost around five per cent of its value.
“Distribution companies and government officials should have fixed this issue before this crisis came,” he said.
“Unfortunately, fuel prices have risen in all countries. If your currency is depreciating at the same time, the problem is worse.
“In determining the pump prices of the fuel, the product price, the dollar rate, and the tax rates charged by the government are the most important factors.
“That’s why one litre of fuel in South Cyprus is 1.35 euros, and in Germany it is 1.85 euros . . . In Europe, states regulate the infrastructure of roads, bridges and highways with the taxes they receive from fuel.
“There is also automatic pricing in Turkey. There, when the price goes up or down by three per cent, it is automatically reflected in the pump price.”
Mr Çağdal added that there are 152 “active petrol stations” in the TRNC, around two-thirds of which are run by K-Pet and the other third by Alpet.
Deputy Prime Minister and Economy and Energy Minister Erhan Arıklı accused the fuel companies of “opportunism” by taking advantage of the “authority vacuum” following the collapse of the coalition government last week.
He said that the Competition Board had launched an investigation into the actions of K-Pet and Alpet and that they could be fined “up to 10 per cent of their annual turnover” if found to have broken competition laws.
The “rapporteurs” that have been appointed to look into the issue, Demet
Arısoy and İlker Erden, have 30 days to complete their report and present their findings to the Competition Board.
“The fuel distribution companies, which sell 25 million litres of fuel per month and have an annual turnover of close to 40 million TL, make a profit of over 14.5 per cent and this profit multiplies with every increase in fuel,” Dr Arıklı said.
“Asking for a price rise before the price rise [is due] is against the law and regulations.”
The minister also said that a “healthy competitive environment” should be created, and that the number of companies selling fuel in the TRNC should be “four not two” so that such “indecent” situations do not happen again.
Economy and Energy Ministry undersecretary Şahap Aşıkoğlu said that a “new price regulation” would be made on Tuesday, and pointed out that, in addition to the falling value of the Turkish lira, the “world is grappling with an energy crisis”.
Speaking on Thursday, Mr Aşıkoğlu said that a motion to increase the price of fuel was submitted to
the Council of Ministers, which is expected to be discussed by Monday at the latest.
He also announced that a ship carrying 95 octane unleaded petrol “passed customs” and the fuel was “put on the market”.
Meanwhile Dr Arıklı has urged consumers to report any “illegal stockpiling” of fuel to the Trade Department’s 171 hotline.
HISTORY OF TL
The latest devaluation of the Turkish lira against the pound and other major currencies is part of a trend that has been continuing for the best part of a decade.
It means that the prices of everyday items, especially imported goods,
will rise. Chronic inflation from the 1970s through to the 1990s under the “old” Turkish lira saw the prices of everyday items reach the millions.
In the early 2000s, efforts were made first to stabilise and then to revalue the currency. 2005 saw the introduction of the “New” Turkish lira, which was worth 1 million of the currency’s previous incarnation and the start of a period of relative stability.
The TL spent the end of the 2000s and early 2010s hovering around a value of between 2.50TL to 3TL to the pound, and it seemed that the days of rapid devaluation and inflation were in the rear view mirror for Turkey and North Cyprus.
However, the TL went from 2.81TL to the pound on May 21, 2013, to 3.72TL on February 1, 2014.
That figure remained stable until the end of 2014, but 2015 saw a further decline, with £1 buying 4.62TL as of September 27, 2015.
From there, the TL saw some gradual growth, clawing its way back to 3.76TL to the pound as of October 15, 2016.
A crisis in August 2018 saw the pound shoot up to over 8TL before coming back down to under 7TL by the end of the year.
In November last year a new record of 11.2TL was set before the pound fell back in February to 9.7TL. It then rose above 12TL in June and then reached the 13TL mark on Thursday.