Summary details
Kosovo businesses and households are feeling strain from higher fuel prices linked to the Iran war, even as the country depends on imported oil products and lacks its own fuel production. In interviews, a Kosovo snack maker said the higher fuel costs are already disrupting operations and could lead to changes in pricing during an important seasonal period.
Ajvazi, a manager at the Pestova company that produces potato chips under the Vipa brand, said the company and its distribution network were hit after the wholesale cost of fuel rose from 1.10 euros ($1.27) to as much as 1.7 euros ($1.96) per liter. He said Kosovo’s fuel supply relies on imports and that diesel and gasoline prices are set by importers, whose profit margin is capped at 12%.
Ajvazi urged the government to help ease the burden on businesses as spring approaches and potato planting begins. He said his company needs a lot of fuel so its costs are “extremely high,” and he added that fertilizer prices have also increased even though the company had reserves.
In an interview, Ajvazi said the firm is reviewing additional costs and that “we are analyzing and calculating every additional cost,” adding that if rising costs continue, it will be forced to adjust its prices. He said the company also faces planning difficulties because about 40% of production is exported under prearranged contracts with fixed prices that can be changed only with 90-day advance notice, making it difficult to manage expenses when inputs fluctuate quickly.
While other Balkan countries have introduced measures to cushion farmers from energy-price shocks, Ajvazi said Kosovo’s government has not acted. He pointed to actions taken by Romania, Hungary and Serbia, including special diesel prices for farmers or lowered state tax income, and he said the Kosovo government did not respond to questions.
Economic experts warned that the government should urgently respond in case of further fuel-price increases to limit damage to the wider economy. Economist Safet Gerxhaliu said, “There is not one sector that is not affected by the price increase,” highlighting how the costs are spreading beyond any single industry.
The price hikes have also burdened ordinary citizens. Bardh Mehmeti, an IT professional from Pristina, said he now pays 100 euros ($115) for a full tank, up from 80 euros ($92) before the crisis, and he said he is now “seriously considering” ways to get an electric car.
Kosovo’s economy has faced pressure for years since the country declared independence from Serbia in 2008 following a war, a split that Serbia does not recognize and that has slowed Kosovo’s efforts to join the European Union. The fuel-price shock comes as Kosovo has also been coping with prolonged political instability, including a period last year when the country lacked a fully functioning government.
At the time of the interviews, Prime Minister Albin Kurti’s government was in a stalemate over failure to elect a new president, and the main opposition Democratic Party criticized what it called government inaction. The party urged temporary tax cuts aimed at easing pressure on citizens and businesses as fuel costs rise.