Bulgarian government commission to prepare package of measures on fuel prices

An interdepartmental commission set up on the orders of and headed by caretaker Prime Minister Andrei Gyurov will monitor the fuel prices situation and prepare a package of measures to address the situation, which will be presented in the coming days, deputy finance minister Stanimir Mihailov told Parliament on March 10.

Mihailov was speaking at a special sitting of the National Assembly to hear officials on “the state’s readiness to provide the necessary quantities of fuel for the needs of the population and industry in connection with the crisis caused by the blockade of the Strait of Hormuz, as well as on the measures that the government envisages to deal with the price shock caused by this crisis”.

Fuel supply in the country is guaranteed for at least 90 days and no logistical difficulties are expected, Mihailov said.

A significantly longer period can also be secured, Mihailov said.

He said that the interdepartmental commission will monitor the availability of oil and petroleum product stocks, their supplies and prices.

“For example, with a 10 per cent increase in oil prices, the average price of A95 petrol from 1.29 euro per litre can be expected to increase to 1.36 euro per litre in the current month,” Mihailov said.

“The consumer price of diesel fuel from 1.34 euro per litre can increase to 1.41 euro per litre in the current month and to 1.45 euro per litre, all other things being equal, in the second month after the increase in international prices. The interpretation is similar for gas oil for domestic and industrial purposes,” he said.

The interdepartmental commission includes the Ministers of Finance, Economy and Industry, Energy, Defence and Interior, representatives of the security services, the Commission for the Protection of Competition, the Customs Agency, the National Revenue Agency and the special representative of Lukoil Neftochim Bourgas, Mihailov said.

The Customs Agency and the National Revenue Agency are carrying out daily checks of supplies and inventories, preparing weekly reports and can propose compensatory measures for businesses and households in the event of a sharp increase in prices, he said.

The analysis shows that the storage capacity in the country significantly exceeds the monthly needs.

There are 106 registered tax warehouses for fuels in Bulgaria, and they have the capacity to provide and store more than the required for at least three months, Mihailov said.

Customs Agency head Georgi Dimov told the National Assembly that the situation raises concerns.

Dimov said that any change in international oil prices affects the final price of fuels.

“I support the state with its regulatory bodies in such situations acting calmly and responsibly so as not to cause panic in the markets,” he said.

“The agency will be a guarantor of stability in the fuel market, business predictability, and consumer protection through balanced policy and analysis,” Dimov said.

He said that the agency has the necessary tools to respond to such a situation in order to protect the country’s economic and financial stability.

The State Reserve and Wartime Stocks State Agency head Assen Assenov told Parliament that the agency is obliged to maintain stocks for at least 90 days of fuel, of which 30 days are created and maintained by the agency with money from the budget and 60 days are created and maintained by the obligated persons under the law, some of which are kept on the territory of EU countries.

Bulgaria reports 85 days of provision out of the required 90, Assenov said.

Lukoil Neftochim Bourgas special manager Roumen Spetsov said that up to the end of March, all needs for oil processing and refining by the refinery have been secured and a delivery schedule for April has been prepared.

Spetsov said that there is currently no information from traders about their refusal to fulfill deliveries for April, even though there is a delay.

Lukoil Neftochim Bourgas works on market principles, Spetsov said.

After the appointment of the special manager, the holding structure Litasko is no longer in charge, which means that there are four independent commercial companies on the territory of Bulgaria, each of which is now self-supporting, on its own budget and strives to buy, sell and guarantee its profit on market principles, and the same applies to Lukoil Neftochim Bourgas, he said.

Spetsov said that this complicates the situation in these current force majeure circumstances.

“There are over 800 vessels blocked in the Strait of Hormuz, 300 of which are oil tankers, 300 are finished product tankers and the rest are for gas delivery, so there are very serious difficulties on a global scale,” he said.

He said that even if oil is found at a good price, there is a risk that there will be no one to transport it, which is currently no less of a threat than the price of the fuel itself.

Lukoil Neftochim Bourgas is a refinery created and designed to work with Russian Urals oil, he said.

After the imposition of sanctions against Russia, the inability to load this oil severely limits the choice of different types of oil to compose such a mixture so that the Neftochim system can work properly and produce quality fuel.

“At the moment, we have to mix approximately six types of oil in order to get closer to the state of the system and produce quality fuels,” Spetsov said.

“This means diversification of the different sources, but the combination of these oils takes place in a strictly defined order, so that when purchasing oil, it is about one that can be processed by the refinery,” he said.

Spetsov said that the refinery is paying a high price for this because the system is wearing out faster than planned and the time between two scheduled repairs is drastically reduced.

“Despite everything, the deliveries we have planned for March will come. Quality fuel will be produced, for April we will have to see how the military actions will develop and whether the contracts will be fulfilled,” he told MPs.

A statement on March 10 by the Energy Ministry said that caretaker minister Traycho Traykov had held talks with representatives of the Bulgarian Oil and Gas Association.

Current trends on international exchanges and their impact on the Bulgarian fuel market were discussed.

“In such a dynamic environment, it is extremely important for the state to have timely and reliable information,” Traykov said.

“We expect clarity from the industry regarding the stocks maintained, current orders, and the applied pricing and reporting methodologies, so that we can monitor the processes and respond adequately if necessary,” he said.

The representatives of the association told Traykov about the degree of utilization of available reserves.

He emphasised the key importance of all participants in the chain who participate in the formation of the final price of fuels and noted the expectations of the refinery to take into account the interests of consumers in the process of achieving permissible commercial profits, the statement said.

The oil sector emphasised its desire for close interaction with the state in order to ensure stability and predictability in the market and assured the minister that they were not making speculative profits, the ministry said.

According to the fuelo.net website, the average price per litre of A95 petrol in Bulgaria rose from 1.25 euro on February 27 to 1.34 on March 10, and that of diesel, from 1.29 euro on February 27 to 1.45 euro on March 10.

(Photo: Ramzi Hashisho/freeimages.com)