Bulgarian Parliament approves creation of state petroleum company

Written by on July 9, 2020 in Business - Comments Off on Bulgarian Parliament approves creation of state petroleum company

Bulgaria’s National Assembly approved at second reading on July 9 a bill to amend the State Reserve and War-time Storage Act, which creates a new State Petroleum Company, tasked with maintaining the state oil and petrol reserves, as well as operating petrol stations.

Under the law, the new company would be spun off from the State Reserve Agency, taking on all its oil and petrol storage assets. The company will be a state entity, but not a commercial one – meaning it would not operate on a for-profit basis – but it can set up commercial subsidiaries. It would operate with the Economy Ministry as its principal.

One such subsidiary is expected to be a company that will operate petrol stations on major roads and motorways. Current plans envision the creation of about 100 petrol stations.

These stations would also have the required infrastructure for charging electric vehicles, in line with Bulgaria’s low-carbon economy and environmental protection strategy, the Finance Ministry said in May, when the bill was tabled.

The impact of the state-owned petrol station network on the fuel retail market was questioned by some opposition MPs during the first-reading debate last month, given that Bulgaria is estimated to have more than 3000 petrol stations in operation.

The Finance Ministry said that the state-owned petrol stations would offer “the lowest price possible to individuals and businesses”, which would improve competition on the market.

Allegations of price-fixing on the fuel retail market are a recurrent topic in Bulgaria. In the past decade, the country’s competition watchdog opened two investigations into such claims, finding irregularities on both occasions – in 2012 and 2017 – but imposing no fines.

The State Petroleum Company is also meant to spur competition on that market by providing a fuel storage option for smaller companies. The amendments also require private storage facilities to make their excess capacity available to third parties or face fines.

Another criticism levied at the bill has been that the government has not put forth any cost estimates for setting up the State Petroleum Company and its fuel retail subsidiary. Last month, Economy Minister Emil Karanikolov said that a full breakdown of the fuel retail subsidiary’s operations would be made “within four months.”

(Photo: Kiril Havezov/sxc.hu)

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