THE recent cuts in fuel prices at the pump appear to be reasonable, Commerce Minister Antonis Paschalides said yesterday.

Late last week oil companies announced price reductions of two cents per litre for petrol and one cent per litre for diesel. The Commerce Ministry attributed the price-cut to an improved exchange rate of the euro against the US dollar, but said it would conduct a cursory probe of the market to determine whether under the circumstances companies could have afforded to drop their prices even further.

“The price cuts are more or less within [reasonable] boundaries,” Paschalides said yesterday.

Today, the ministry will follow up by publishing the latest update to its routine retail price-watch.

The previous update showed significant discrepancies in prices charged in the various districts, with some petrol stations in Limassol charging a full four cents per litre more than elsewhere.

Paschalides’ remark that prices in Limassol – and to a lesser extent Paphos – were unjustifiably high drew an angry response from the Petrol-station Owners Association. They say they are operating in a free market, adding that prices are always displayed at the entrance to petrol stations, so motorists have the right to choose where to buy fuel.

Yesterday, a group of petrol station owners – not representing the association – sent Paschalides a letter asking him to explain whether, at the end of the day, the fuel market in Cyprus is free or controlled.

Their implication was that the minister is trying to regulate prices in breach of a law passed in 2004 liberalising the sale of fuels.

Paschalides replied that whereas the market is free, the law does allow the ministry some degree of intervention in determining wholesale and retail prices, such as setting price caps.

He said that transportation, storage and electricity costs were more or less the same for all petrol stations across the island, and went on to wonder why Limassol should be different from other districts.

Paschalides also dismissed the accusation that he was “out to get” certain petrol station owners:

“These are the shenanigans of certain people...the minister does not determine prices, nor is he out to get anyone, except those who profiteer at the expense of the consumer,” he said.

Last month parliament passed a law enabling the Commerce Minister to impose a cap on both wholesale and retail prices of fuel and liquid gas for up to 45 days.

The new law was introduced after a showdown with petrol stations last February when Paschalides imposed an eight-day cap on the retail price of petrol and diesel due to a widespread perception that the pump price was artificially high.

The move prompted most petrol stations across the island to shut shop in protest.