Bulgaria's oil refinery halts production over lost licences

27th July 2011, Comments 0 comments

Bulgaria's sole oil refinery, Russia-owned Lukoil Neftochim Burgas, said on Wednesday it was halting production after the customs agency stripped it of two key licences necessary for its operations.

"We are... following the (agency's) instructions. We have put the refinery on an emergency operations regime and lowered production with a view to halting it for the time being," Neftochim supervisory board member Valentin Zlatev told journalists.

Bulgaria's customs agency said in a statement on Wednesday that it had withdrawn the company's licences to operate two so-called tax warehouses, where excise goods such as oil and fuels can be produced or stocked before being subjected to a duty.

The decision, which entered into force late on Tuesday, was prompted by Neftochim's failure to install important online connections between the fuel metres at the warehouses and the Bulgarian revenues agency by mid-June.

As a result, "the company no longer has the right to refine oil and sell fuel on the Bulgarian market," customs chief Vanyo Tanov told state BNT television.

Neftochim is Bulgaria's leading producer and supplier of fuel with a 40-percent market share and a capacity of 142,00 barrels per day, finance ministry data shows.

The company, which has one of the largest petrol station chains in Bulgaria with some about branches, makes up 9.0 percent of Bulgarian gross domestic product (GDP) and also exports fuel to neighbouring Serbia, Macedonia, Greece and Turkey.

However, Finance Minister Simeon Djankov assured journalists before meeting Lukoil officials in Sofia on Wednesday: "There will not be a (fuel) shortage."

"We have to show that both the large and the small companies are equal before the law and have to abide by its requirements," he added to explain the licence decision.

To better monitor the payment of excise duties and taxes, the finance ministry obliged petrol station owners to link their meters to its revenue agency.

Tanov meanwhile told national radio the company could have its licences back "within the next two, three months" if it installed the links soon.

© 2011 AFP

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