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Bulgarian PM Backs Lukoil License Suspension, Says Ministers Should Secure Fuel
Date: 29/07/2011
Bulgarian PM Backs Lukoil License Suspension, Says Ministers Should Secure Fuel

Bulgarian Prime Minister Boyko Borisov has dubbed the revoked licenses of the two tax warehouses of Lukoil "a test" for the ministers".

"Now we shall see if they were right in claiming that imported fuel is cheaper and the Burgas-based Neftochim refinery is not vital given that it fails to observe the law", Borisov said in a phone interview for the morning broadcast of private TV channel bTV.

Deputy Prime Minister and Finance Minister Simeon Djankov and Traicho Traikov, Minister of Economy, Energy and Tourism said Thursday that the suspension of the permits would not affect the domestic fuel market.

The conflict between the government, the Customs Agency and Lukoil Neftochim escalated Wednesday after the refinery ended up with a revoked fuel production and distribution license.

As a result, the company was forced to start phasing out capacities and to halt supplies to the market.

The sanctions against Lukoil were imposed after it failed to install the mandatory measuring devices by June 26.

The new equipment is to allow the real-time electronic submission of information to the customs administration about the fuel volumes entering the processing plant and the fuel volumes released on the domestic and foreign markets.

This data is crucial for ensuring control over the payment of excise duty and VAT.

In his Friday interview, Borisov stressed that it was only natural for the state to have a concrete schedule, provided that it was about to take away the license of its biggest company.

"At the same time, each minister must have made calculations about how to defend the economy and the industry in the case of a crisis", the Prime Minister said, responding to the accusations of Lukoil Bulgaria CEO Valentin Zlatev who questioned the state's preparedness to face the difficult situation.

Borisov confirmed that he had expressed his political support for the decision to suspend the license, adding that he had confidence in his ministers.

"The ministers have guaranteed that there will be no quakes in the system, "Borisov said, commenting on the suggestion that the events could lead to ministerial resignations.

The Bulgarian Prime Minister reminded that it was precisely the management of the refinery that had initiated the proposal for installing measuring devices along the distribution chain of petroleum products.

The reason for the proposed step was alleged rampant fuel smuggling.

At the same time, Borisov insisted, the company deliberately postponed the installation of the new equipment until the last moment because "if it were something good, they would have installed it, right?".

When asked about whether the prosecution would take an interest in the affair, Borisov replied that "I do not suspect anybody but the best way to keep suspicion out is to control the entire process from the point of import to the petrol pump, which is not your or mine responsibility, but the responsibility of the National Revenue Agency and the Customs Agency".

The Bulgarian Prime Minister explained that the refinery had the opportunity to appeal the decision of the customs administration in court, but he would never press for the revocation order to be annulled.

Borisov dismissed the idea that the country could be hit by a fuel supply crisis, saying that filling stations would not experience problems and even Lukoil would probably import fuel for its retail chain.

Regarding aviation fuel, which is supplied only by the Burgas-based plant, he mentioned that the customs authorities could supervise the processing of the unrefined petroleum stored at the refinery and supply the airline companies with the product.

Borisov also criticized socialist leader Sergey Stanishev, who earlier termed the Lukoil crisis "a theatrical performance", saying that left-wing MPs had been involved in fuel smuggling schemes and had even been caught red-handed at border checkpoints,

The Prime Minister denied any connection between the suspension of Lukoil's permits and the talks on the construction of Belene NPP.

Topic: Business

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