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The government plans to establish a “state oil company” that has its own service stations and sells fuels with a minimal margin to ease tensions in that market. This was made clear on Friday when former gaming chief Vasil Bozhkov, accused of non-payment of fees for more than BGN 500,000, posted screenshots of text messages exchanged with Finance Minister Vladislav Goranov about the work of the Gaming Commission, whose former members are also accused
The announcement with the idea for the state oil company came from the Ministry of Finance and, according to the announcement, it will be for the Minister of Economy and one of the functions of the future company will be to build a network of service stations in the country “to improve competition and guarantee the lowest possible level of prices for citizens and companies. ” Electric cars will also be able to refuel at state service stations, the information added.
Intentions without analysis and calculations.
It does not indicate the amount of capital of the future company, nor does it estimate the amount of investment to build such a network, nor its scope and deadlines for the implementation of the idea.
According to energy expert Ilian Vassilev, a former Bulgarian ambassador to Russia and president of the Association for Analysis and Alternatives, such a network cannot be built in less than three years, although the government says it will happen in one year. He believes that the future company will most likely decide to acquire such a highly developed chain and it is possible that this is the “Petrol” network, which after privatization lost its stable position in the market, and in recent years has problems financial and even last year. To cover your losses, cut almost 3/4 of your capital. Industry insiders suspect the scheme may include the growing power over the past two years “Insa Oil” by controversial businessman Georgi Samuilov. Deputy MRF Delyan Peevski is alleged to be behind this.
Vladislav Goranov himself, whose department proposes that the state enter the fuel market, did not appear to defend and explain his idea, but has been avoiding journalists in recent days.
On the other hand, Deputy Prime Minister Tomislav Donchev and Economy Minister Emil Karanikolov commented on the subject and he is expected to be the director of the future company. Although Karanikolov is in the power of Ataka’s share, he is believed to be in reality an MRF candidate. In recent years, the ministry portfolio he heads has included significant budget funds. BGN 500 million went solely to the dam repair company, which is currently in the whirlwind of public procurement. He is also in charge of the Metrology Agency, which is responsible for the quality of the fuel, and is not quite sure if this is in line with market rules.
With minimal marking
The state-owned oil company will sell fuels with minimal marking, said Deputy Prime Minister Tomislav Donchev, who said it would not harm market competition.
The Competition Protection Commission periodically inspects the industry, which first generates suspicions of infringements and price collusion, and then finds no irregularities or cartels.
“When the state unites, when there are a certain number of sites, when it sells fuels with minimal marking, I think it will be good for the entire market, especially for consumers. I insist that this is not prohibited or limited by the Bulgarians or European legislation “Donchev said.
Karanikolov also emphasized in a briefing at the Cabinet how consumers will win.
“The goal is really to alleviate that tension in terms of price and fuel quality. You know, there is an issue like that almost every year.”, commented the Minister of Economy, according to whom with the state company the sector would be more predictable. He promised that the oil company bill would be published soon for public discussion.
Construction of service stations throughout the country for one year.
According to him, in the next year the state service stations would be built in the territory of the whole country in the settlements and in the arteries of the main roads.
Experts say this is not physically possible unless a ready network is purchased, which just needs to be renamed.
The objective is to have a clearer competitor in the market, so that the prices are clear and there is a quality that can be controlled, we will be equal to all the other subjects in this market, said the minister. He gave the example of other EU countries where there are state food chains.
The intention of the state service stations was supported by the Bulgarian Confederation of Employers and Industrialists (CEIBG), whose president Kiril Domuschiev has a concession for the port of Burgas, through which Insa Oil imports fuel.
According to CEIBG, the creation of such a structure will undoubtedly improve competition in the market and help to guarantee the lowest possible prices for citizens and businesses.
One guarantee of this, according to the organization, is the proposal by the Ministry of Finance that authorized warehousekeepers cannot deny fuel storage to other depositors. Another advantage is the warehouses, which the future state-owned company is expected to have, where fuels are also stored for other investors, CEIBG says.
Assumption of oil reserves from the State Reserve
According to the organization, another positive element in the proposal is that the state oil company will carry out all the functions of the state reserve for the storage and renewal of oil and energy product reserves, which coincides with the position of the CPC in its latest inspection of the fuel market. The Antimonopoly Commission has proposed that the state build its own tax warehouses to have more competition in this segment, which is also dominated by Lukoil with a participation of almost 50%.
It is clear from the Ministry of Finance’s announcement that service stations will actually be the smallest activity of the company, which will take over the State Reserve for the provision and management of mandatory fuel reserves. Separation of this activity into a separate company “would optimize the management of the required reserves” and “would guarantee their achievement and sustainable maintenance in accordance with the requirements of European legislation”.
A month and a half ago, the Supreme Cassation Prosecutor’s Office commissioned another inspection by the CPC, which must establish whether there are no coordinated practices in the price of fuel. The order was preceded by an analysis by the Customs Agency of the Ministry of Finance, which found that while Brent crude oil prices fell 47.4 percent in March, the final price at service stations fell only 11 percent. It also turned out that from the warehouse to the service station, the price of fuel in our country increased by an average of approximately 30 cents per liter.
Another boost in the market
Currently, the fuel retail business is mainly run by large service station chains, and Lukoil has the largest share. A few days ago, Parliament finally adopted a legal amendment that directly affects the company’s business. This is the requirement to divide the “Lukoil Bulgaria” oil products pipeline into separate tax warehouses, against which both the oil company and the branch organization of large companies in the sector protested.
Under the new regulations, the Lukoil product line, which is 320 km long and passes through different areas and connects the company’s bases, can no longer be a tax warehouse. The adopted texts require for each territory of a customs office a license at the respective base and install means to measure the entry and exit of the pumping facilities at each base. The goal is greater control over the physical flow of fuels.
Mareshki intends to lead the construction of state service stations
As expected, the chief of pharmacy and oil, Veselin Mareshki, whose party often backs GERB with his votes, described the finance ministry’s intention of a “State Oil Company” as “extremely correct, but a little late” . This is not a surprise, as he has been championing the idea of state service stations for years.
Mareshki even insisted that Volia lead the project to build state service stations. “Since the idea is ours, it is integrated into our electoral program in 2017, I believe that it is correct and correct that we implement it. In this way, we will ensure that it does not distort or fail. We are ready to give your full successful experience in the sector so that the chain works in a short time and so that the Bulgarians are satisfied “Mareshki says, but without specifying exactly how he imagines that such a project is “given” to a specific party.
Mareshki himself has service stations that sell fuel at lower prices, but this has not affected the state price level at other points of sale. However, Mareshki claims that locally, its sites have forced competitors to cut prices.
“The point is that I or anyone else may not be interested in covering the whole country and then, for example, in Burgas it is BGN 1.35 and in Vidin it is BGN 1.85. These are big differences. The idea is the state within a year to build a site in each city and give everyone the opportunity to access these prices “he said to Mediapool.
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