Eşel Mobil System being removed from fuel: Phased transition plan and price impacts

The Ministry of Treasury and Finance has prepared a three-stage exit plan to terminate the Eşel Mobil System, which was activated in March within the scope of the fight against inflation. The normalization trend observed in international oil markets and prices stabilizing indicate that this tax support mechanism has completed its mission. With the new regulation, the tax advantage applied to fuel products such as gasoline, diesel, and autogas will be gradually withdrawn in accordance with the determined schedule. According to the decision published in the Official Gazette, the application will end completely with a soft transition process without disturbing market balances by October 1, 2026. It is stated that this decision was taken to manage volatility in fuel prices and lighten the fiscal burden on the budget.

The process of removing the Eşel Mobil System has been tied to a specific calendar in order not to shock the markets. Accordingly, until July 31, 50% of possible increases in refinery exit prices will not be reflected to the consumer via Special Consumption Tax (ÖTV) reduction. However, during the second stage of the calendar, between August 1 and September 30, this support rate will be reduced to 25% and a partial reflection process will begin. As of October 1, the system will completely become history and changes in fuel prices will be reflected to pump prices unconditionally. On the other hand, in case of a decrease in refinery prices, contrary to the current application, this will be accrued as an ÖTV increase and prices will be raised.

Another important article of the decree law that entered into force is that the Domestic Producer Price Index (D-PPI) update, which is required to be made in July and December, will not be done this year. Under normal conditions, the indexing performed twice a year for products in the list annexed to the ÖTV Law was known as a factor increasing tax rates on fuel. The government's refraining from making the said update this year is considered a strategic step in terms of preventing a possible extra increase in prices and easing inflationary pressures. This situation aims to contribute to price stability by preventing consumers from facing an extra wave of price hikes originating from ÖTV.

Among the reasons for the removal of the system are the decreasing effects of geopolitical tensions, primarily in the US, Israel, and Iran line, on the markets. Despite the system being put into effect in March, it is stated that this disinflationary policy became less necessary with the downward trend in global oil prices. Finance officials predict that the gradual termination of the application will not have any negative impact on general inflation data, but will contribute to budget discipline. With the end of the Eşel Mobil application, it is planned that the fiscal burden created by the state on the budget side will be completely eliminated and resources will be directed to more efficient areas.