Monday, September 28, 2020
Home Oil & Gas Bulgarian Parliament approves the establishment of state oil company

Bulgarian Parliament approves the establishment of state oil company

The Bulgarian National Assembly adopted legislative changes that pave the way to the establishment of a state-owned oil company. The amendments to the Law on State Reserves and Wartime Stocks envisage that the new company, set up under the Ministry of Economy, will manage the warehousing and replenishment of the country’s oil reserves and build a network of petrol stations across the country.

According to the Parliament’s statement, the oil company will be a state entity, not a commercial one, but it can set up commercial subsidiaries for carrying out activities related the management, maintenance, operation and of tax warehouses, as well as storage and trade with crude oil, petroleum products, as well as alternative fuels.

The company, which cannot be privatised and cannot undergo insolvency proceedings, will seek a license to operate tax warehouses within three months of its establishment.

Bulgaria’s Ministry of Finance proposed to establish a state-owned company two months ago. Based on the proposal the new company is expected to optimise the management of the mandatory oil and oil product reserves of the state and ensure they are sustainably maintained in line with the EU requirements.

The necessity of establishing a network with an additional 100 petrol stations was questioned by some opposition MPs during the first-reading debate, given that Bulgaria is estimated to have more than 3,000 petrol stations already in operation on its fuel retail market.

Just before the Finance Ministry proposed the establishment of the state oil company in May, the National Assembly approved amendments of the Excise Duties and Tax Warehouses Act, aimed at bolstering tax controls over the country’s biggest fuels seller, Lukoil Bulgaria.

Bulat Subaev, Director General of Lukoil Bulgaria said that the legislative changes that require the fuel supplier to split its single tax warehouse into separate regional units may prompt Lukoil Bulgaria to halt its operations.

The Bulgarian Oil and Gas Association also called on the government to withdraw the amendments of the Excise Duties and Tax Warehouses Act, which was adopted in the wake of the COVID-19 crisis together with the reforms of the Health Act.

“Currently, the fuel market is suffering huge losses in the face of constantly declining turnover and depreciating petroleum products. At the same time, the industry is one of the largest employers and taxpayers in the country,” read the statement of the Association urging the withdrawal of the legislative changes on tax warehouses.

“If the government considers that changes to the requirements for tax warehouses are necessary, this should be done only after a broad discussion with the affected operators in the industry and in full transparency,” the Bulgarian Oil and Gas Association added.

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