Portugal’s government has launched its ‘cheap diesel’ trial for HGVs filling up close to the border with Spain.
For a test period of fourteen weeks, drivers of goods vehicles of 35 tonnes and over, may fill up in border filling stations at a 13 cents per litre discount to encourage them to spend money on fuel in Portugal, rather than nipping across the border to access cheaper fuel in Spain.
The 55 filling stations in the pilot project also will be allowed to extend the discount price to foreign registered HGVs trucks as from Friday when the €150 million scheme starts.
The filling stations are located in eight municipalities in four border areas and if the trial is successful, it will be extended across the country from next year.
This scheme aims to partially refund the ISP tax on fuel products in order to match the diesel selling price in Spain.
The 13 cents per litre discount applies only to HGVs and there is an annual limit of 30,000 litres per truck.
Eduardo Cabrita, from the Prime Minister’s office, commented, "This scheme results from the fact that Portugal is bound to a principle of non-discrimination laid down in European treaties and in other legislation."
This sudden desire for ‘non-discrimination’ is a government first and based more on the loss of tax revenue from cross-border fuel sales than any noble European idealism.
The pilot project covers four border areas through which the largest volumes of road freight travels. Included are the municipalities of Bragança, Macedo de Cavaleiros, Almeida, Guarda, Elvas, Estremoz, Serpa and Beja.
As for the Algarve, the Beja district is the closest point at which the discounted fuel will be available, hardly helpful for the region's exporters.
The Secretary of State for Energy, Jorge Sanches Seguro, admitted there had been a few difficulties in the implementation of the pilot project as many of the border fuel stations on the Portuguese side were shut down years ago.
The minister called for companies to invest in these areas as it will be “a lasting investment.”
The diesel price drop resulted from the uproar from the transport sector when the ISP went up another 6 cents in February this year despite crude oil prices being at worldwide lows.
After the 2008 transport drivers’ strike, which brought the country close to a standstill, the government continued to claim that a dual pricing structure for diesel was too costly to implement and too tricky to set up and monitor.
Now that the Tax Authority is largely computerised, it can track company transport patterns through the Guia de Transporte system and spot any anomalies caused by cheats.
The pilot scheme is predicted to cost the State €150 million in lost taxes and VAT, a loss that the government hopes to make up from higher sales at Portugal’s pumps when the price difference is eroded or disappears.
Time will tell - good results from the pilot scheme are crucial if the cheap diesel scheme is to be rolled out along the border and then further inalnd.
