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The role of the FPS Economy
Every working day, the Directorate-General for Energy of the Federal Public Service Economy calculates the maximum prices of finished products (petrol, diesel, gas oil, petroleum oil, kerosene and residual fuel oil) in accordance with the provisions of the Programme Agreement.
It then publishes these prices on the FPS website, and also distributes them by e-mail and fax.
Would you like to get this information for free? Then register with the FPS Economy at Petrol.Prices@economie.fgov.be.
The program agreement is an agreement between the Ministers of Economy and Energy and the Belgian federation Energia. The program agreement determines the maximum prices for the most common petroleum products and the way in which these prices can change. The program agreement applies to the sale to the end user.
The Programme Agreement consists of a main agreement that sets out the general framework within which the maximum prices are to be determined. The programme agreement is accompanied by a “Technical Annex” defining the price formulas on the basis of which the maximum price for the main petroleum products is determined. This technical annex can be amended at any time by means of a so-called “covenant”, if both parties agree. This enables a fast response to altered product specifications or changes to other parameters.
The Programme Agreement shall run for three years and may be tacitly renewed for further three-year periods. It may be terminated by either party at any time upon 12 months' notice from the date of termination.
The first Programme Agreement dates back to 1974 and was a result of the oil crisis in the early 1970s. After the first oil crisis in 1973, Belgium's supply was jeopardised by the slow alteration of maximum prices for petroleum products in response to the evolution of the global market. Alterations to the prices had to be approved by the Prices Committee in those days. This inflexible procedure led to a difference between oil prices on international markets (= benchmark for the purchase price of petroleum products) and the sales prices at which the products could be sold on the Belgian market.
In 1974, the government therefore developed a new mechanism whereby the fluctuations in the quotations of petroleum products on the international markets were automatically translated into a maximum price at the pump.
The basic principle is that the pricing structure takes into account all relevant costs in the total supply chain.
The Directorate-General for Energy calculates the maximum price for the following petroleum products:
- petrol (95 RON E5, 95 RON E10, 98 RON E5, 98 RON E10),
- diesel gas oil for road transport (B7, B10, B20 and B30),
- residual fuel oil 1.0% S,
- gas oil for heating 50 S
- diesel gas oil for heating purposes, agricultural purposes and I&C purposes,
- kerosene (types A, B and C).
For the gas oil for heating 50 S, diesel gas oil for heating purposes, agricultural purposes and I&C purposes and kerosene type C products, there is a maximum price for deliveries of 2,000 litres or more and for deliveries of less than 2,000 litres.
The gas oil for heating 50 S, diesel gas oil for I&C purposes and kerosene type C products are also subject to a separate maximum price when sold through a service station.
The maximum prices are not necessarily the final sales price paid by the end user. Sellers of petroleum products often give a discount on the maximum rate. The sellers are obliged to display the discount applied in relation to the maximum price.
The following elements are taken into account when calculating the maximum price for each product.
The price of the refined product depends on the quotation for the finished product on the Rotterdam market. This is expressed in dollars per ton and converted into euros per 1,000 litres.
The quotations in the Programme Agreement are the quotations from Argus used to calculate the maximum price. Argus is a reference centre for energy prices that publishes daily indicative quotations for finished products on the main world markets.
Added to this are the transport costs for the Rotterdam-Antwerp route, transport to the Belgian refineries (always via Rotterdam) and insurance and losses.
The Programme Agreement sets a maximum gross distribution margin per product.
The maximum gross margin granted to oil companies covers the distribution and logistical costs of bringing the product to the end user.
These costs include transport from the refinery to the storage site, storage, transport to the service stations, distribution at the service stations, distribution of gas oil for heating to customers, marketing and promotion.
The distribution margin is indexed twice a year, on 1 April and on 1 October.
The statutory charges are then added to the daily price:
- the contribution for APETRA (Belgium's Central Stockholding Entity),
- the contribution for BOFAS (Fund for soil remediation around petrol stations), and
- the contribution for the Social Heating Fund for Fuel Oil.
The contribution for APETRA is a contribution for compulsory stocks. This contribution will finance the company APETRA (Agence pétrolière – Petroleumagentschap), which is responsible for holding strategic stocks of crude oil and petroleum products in Belgium. These stocks ensure Belgium's supply in the event of a crisis. The contribution is indexed 4 times a year: on 1 April, 1 July, 1 October and 1 January.
The contribution for BOFAS is a contribution to the soil remediation fund for service stations in Belgium. This contribution only applies to the maximum sales price for petrol and diesel intended for the end user. It finances the BOFAS fund, which provides operational and financial assistance to service stations that are remediating their soil.
The contribution for the Social Heating Fund for Fuel Oil is only integrated into the maximum price for propane (in bulk and in bottles), kerosene and gas oil for heating. It is only used to partially finance the heating bill for households with a modest income.
Excise duties on energy products are fixed taxes (fixed amount per product in absolute value). They are not dependent on the price of the finished product. They represent a large part of the total price cap, especially for petrol and diesel.
In addition, 21% VAT is added to the sum of all the preceding items, including excise duties.