Will fuel be 20 cents cheaper from 1 October? What has actually been approved and what remains a promise

PEOPLE ONLINE SAY: “Fuel will be 20 cents per litre cheaper from 1 October.”

STATUS: 🟡 NOT CONFIRMED.

A public target has been stated to reduce fuel prices by up to 20 cents per litre through a package of measures. That is not the same as an adopted decision or a guaranteed price decrease at filling stations.

On 21 September 2026, Prime Minister Andris Kulbergs said the governing partners were considering instruments Latvia could implement immediately and intended the measures to apply from 1 October. In the public discussion, 20 cents was presented as a target that might be achieved, not as a legally secured and market-guaranteed reduction.

When this article was prepared on 24 September, Parliament still had to vote on the most concrete measure: a further excise-duty reduction for petrol and diesel. Its theoretical effect is about eight cents per litre if retailers pass the tax reduction through in full.

What did the Prime Minister actually say?

The statement concerned discussion of a package responding to high fuel prices and international market disruption. The objective was to identify several instruments whose combined potential effect could reach up to 20 cents per litre.

Economics Minister Viktors Valainis publicly questioned whether the measures then on the table would be sufficient. He said a combination of excise and value-added tax cuts might be required to reach 20 cents. The Prime Minister opposed a unilateral VAT reduction without agreement from the European Commission.

The accurate formulation is therefore: the head of government set a target and described a possible combined effect; he did not guarantee a 20-cent fall at every filling station.

What had reached Parliament by 24 September?

On 23 September, Parliament's Budget and Finance Committee supported amendments that would apply from 1 October until the end of 2026 and:

reduce the temporary diesel excise rate from EUR 396 to EUR 330 per 1,000 litres;
set a temporary unleaded-petrol excise rate of EUR 490 per 1,000 litres.

The duty difference is 6.6 cents per litre for diesel and 6.5 cents for petrol. Including the VAT effect, the theoretical decrease for both fuels approaches eight cents per litre.

Eight cents is not automatically guaranteed. Parliament's official information expressly states that this effect depends on the tax reduction being fully reflected in retail prices.

At the time of writing, Parliament's official information still described a vote expected on 24 September. The stage must therefore not be presented as complete until the voting result and final adopted text have been published.

Has a 12% VAT rate for fuel already been approved?

No. The Ministry of Economics calculated that reducing VAT on fuel from 21% to 12% could, with full pass-through, lower diesel prices by about 15.6 cents and petrol prices by about 14.6 cents per litre.

These are calculations for a possible policy option, not a tax rate in force. Public discussion has also raised the need for agreement with the European Commission. The VAT scenario must therefore not be counted as an adopted measure.

Will changing biofuel requirements lower prices for all motorists?

Amendments supported in committee would remove the mandatory biofuel blend for marked diesel used in agriculture and fisheries and for certain military fuel.

This is not a general price reduction for ordinary petrol or diesel sold at all filling stations. Estimated savings of EUR 0.03 to EUR 0.15 for these special fuel categories cannot be used as evidence of a 20-cent decrease for every consumer.

What does the spring excise cut show?

In spring 2026, diesel excise duty was reduced from EUR 467 to EUR 396 per 1,000 litres. With full pass-through, the theoretical effect including VAT was about 8.6 cents per litre.

In the Competition Council's full analysis, the main econometric estimate found that diesel pump prices were on average 4.95 cents per litre lower, equal to about 58% pass-through. An alternative method produced an estimated pass-through of 61–64%.

In its 21 September statement, the Ministry of Economics summarised the result as about 61% pass-through and an average reduction of about 5.2 cents per litre. The figures differ because they refer to different estimates in the Council's analysis and rounding, but the conclusion is the same: the previous tax cut was only partially passed through to pump prices.

Why might prices not fall by even eight cents on 1 October?

Taxes are only one component of the pump price. Prices are also affected by:

international crude-oil and refined-fuel purchase prices;
exchange rates;
logistics and storage costs;
strategic-reserve and biofuel compliance costs;
retailer pricing, discounts and competition.

A tax reduction may therefore limit an increase without appearing as an equally large overnight fall on station price boards. If wholesale prices rise at the same time, the tax cut may only offset part of that increase.

What does this mean for businesses?

Transport, logistics, construction, manufacturing and other fuel-intensive companies should not automatically budget for a 20-cent saving on every litre in October 2026.

A prudent plan should model separately:

the theoretical maximum effect of the concrete excise proposal — about eight cents per litre;
a lower actual pass-through scenario based on the spring experience;
the effect of an increase or decrease in international fuel purchase prices.

For VAT-registered businesses that deduct input VAT on fuel used for economic activity, a possible VAT-rate reduction would not change costs in the same way as it would for households. The Ministry of Economics has expressly highlighted this in its calculations.

Fact-check conclusion

The claim that “fuel will be 20 cents per litre cheaper from 1 October” is not confirmed. Twenty cents is a political target and the possible combined effect of several measures. The most concrete excise reduction reaching Parliament would theoretically provide about eight cents per litre, and only with full pass-through. It is too early to call the promise broken because 1 October has not arrived and the legislative process was not complete when the article was prepared.