Hungary: MOL conditioned the INA Croatia refinery modernization with tax changes

Published on 23. December 2014., SEE Energy News

Executive Director of MOL owned Ina’s (Croatia oil company) Refining and Marketing Department, Viktor Bengt Oldsberg said that “modernization of Oil Refinery in Rijeka will occur if the state changes the tax aspect”, referring to the elimination of tax loss refinery, or a debt of 42 MEUR on differences in the calculation of own consumption and losses in refineries.

For the modernization of Rijeka Refinery should be changed the way of taxing in the Republic of Croatia so that the refinery loss would not be taxed -Oldsberg presented this latest condition for continuation of Rijeka refinery modernization, namely of coking plant construction in Urinj at a recent meeting with representatives of the Workers’ councils and trade unions.

At the participants’ request to explain the plans for both refineries, according to the report from the meeting, to which Novi list had access, said that “modernization of Oil Refinery in Rijeka will occur if the state changes the tax aspect”. – I will not go into the details of the business plan because it has not been adopted yet, this is just a backdrop, it is a platform for the final draft of the business plan, continues Oldsberg. Tax aspect about which he spoke represents solutions of tax inspection of the Ministry of Finance according to which it was established in Ina in November this year the obligation for payment in respect of VAT and income tax expense for 2009th and 2010th, in the amount of 42 MEUR, based on differences in calculation of own consumption and losses in refineries.

Slightly lower amount was determined on the same grounds also for the last two business years, and Oldsberg pointed out at the meeting that there were not similar tax benefits in other markets. Oldsberg also said that there was no magic wand that would save oil refinery in Sisak. This refinery, he says, creates a loss of 40 to 45 MEUR per year, but on the question whether the loss is based on lost income in the prices of domestic oil that is processed in the refinery, and it is lower than the price which would be possible to achieve by the oil selling on the market, Oldsberg answered affirmatively. Rijeka refinery does not work currently due to weaker demand in this part of the year and the relation between price of crude oil and petroleum products, says Ina. Demands for gasoline are covered from Ina stock, and certain amounts of diesel fuel are imported. This year’s production at the refinery was 2.7 million tons, and work should begin in the first quarter of next year.