POLAND: State-Owned Petrol Retailer Accused Of Manipulating Prices Ahead Of Key Elections

Polityka Insight reports that Poland's state-owned petrol retailer Orlen is "tapping into strategic petroleum reserves to maintain low prices at stations" which is intended to "lower inflation and support [the ruling party] PiS in the elections."

• The analytical desk has learned "unofficially" that Orlen has been using petroleum from its strategic reserves for the past few weeks. The use of these reserves can be ordered by the Climate and Environment Ministry.
• Polish analysts have been flagging the growing divergence between rising global crude oil prices and falling pump prices in Poland. Daniel Kostecki, an analyst with CMC Markets, suggested that the current prices amount to dumping.
• Local transport companies and farmers have been complaining that they are facing problems with wholesale purchases of fuel, such as delays and incomplete deliveries of orders, for which they are blaming Orlen.
• The state-owned retailer had previously been accused of exploiting its market position to manipulate prices around the turn of the year, when it adjusted its profit margin to smooth out the impact of the reinstatement of a higher VAT rate on fuel.
• The first key question for the market concerns the implications for monetary policy, with mBank analysts suggesting that "inflation engineering" may result in the NBP pursuing an overly aggressive easing cycle and having to reverse course next year.
• The second question concerns the sustainability of Orlen's strategy. Dawid Czopek of Polaris FIZ fund told Gazeta.pl that the retailer is already "outside its comfort zone" and will have to raise prices after the elections or risk the "Hungarian scenario".
• Sources told Polityka Insight that Orlen CEO Daniel Obajtek told his business partners that the extraordinary situation in local fuel markets will end after the elections, with large price hikes planned for November and December.