In order to manage storage and replenishment of the country’s oil reserves, the Bulgarian Parliament has adopted legal amendments necessary for the establishment of state-owned company.
The new company will engage in the establishment and operation of tax warehouses, as well as storage and trade with crude oil and petroleum products. The state-owned oil company cannot be privatized and cannot undergo insolvency proceedings. Within three months of its establishment, the company will seek a license to operate tax warehouses.
In early May, the Parliament approved legal provisions for the establishment of a state oil company. Fuel warehouses will be created and managed by the state oil company, which is to guarantee a direct link between tax warehouses and end sellers of fuels which in turn will ensure transparency and the lowest possible price for consumers. The tax warehouses managed by the state oil company will be subject to registration under the general terms and procedures of the act. The facilities will be possible to be used by fuel suppliers on non-discriminatory conditions and neutrality. The fact that the state joins the fuels market as a supplier is expected to increase the competition in the wholesale and retail trade in fuels and among licensed warehouse holders. When the idea for the state oil company emerged, it was said that the Government was aiming to set things right on a market where one company, Lukoil Bulgaria, holds 80 % of the fuel warehouses and where a drastic decrease in the price of oil on international markets has led to a mere 25 % drop in fuel prices for end-users. Last month, prior to the announcement of the creation of state oil company, the Parliament adopted amendments to the Excise Duties and Tax Warehouses Act, which oblige operators of oil product pipelines located on the territory of more than one regional customs office in the country to apply for separate licenses with each one of these regional offices.
General Manager of Lukoil Bulgaria, who operates the Burgas-Sofia oil pipeline, Bulat Subaev said that the company could suspend operation due to these legislative changes. He said that given the deadlines, which are a month after the adoption of the amendments, the amount of work required and the practical impossibility of meeting the deadlines, the operation of the entire company is in jeopardy. Plus, Subaev believes that the new amendments will entail huge investment and administrative costs.