Lukoil Bulgaria May Extend Freeze on Retail Fuel Prices - Report

Energy | April 26, 2011, Tuesday // 08:08|  views

Bulgaria's prime minister Boyko Borisov (L) is pictured here with the head of Lukoil Bulgaria, owner of the only oil refinery in the country, Valentin Zlatev. Photo by Sofia Photo Agency

Russia's Lukoil, owner of Bulgaria's only oil refinery, may agree to extend the one-month freeze on retail fuel prices, which expired during the Easter holidays, according to insiders.

At the end of March Bulgaria's center-right government convinced Lukoil Bulgaria to place a one-month moratorium on the increase of its gas and diesel prices as part of efforts to tame the spike in petrol costs, linked to the increase in global crude oil prices.

The agreement was reached after car marches across the country protested against recent fuel price hike.

The moratorium expired on April 23, Saturday.

Sources from Lukoil Bulgaria, who spoke to Dnevnik daily on condition of anonymity, neither confirmed nor denied rumors that the moratorium may be extended, but said more clarity is likely on Tuesday.

Transport Minister Alexander Tsvetkov was the first to hint a new freeze is likely as early as last week. He said he did not expect retail fuel prices to surge after the agreement between the government and Lukoil expires, but should this happen, the two sides will most probably agree on what he called a "grace period".

The parameters of the new agreement were not immediately clear.

Diesel has been selling at 2.47 levs per litre since April 23, while the most widely used fuel A 95 – at 2.37 per litre.

Reports of a possible new agreement between Lukoil and the government have angered even more the other fuel companies, who said this would be very bad news.

The moratorium is in force for only 29% of the retail fuel market, which is the share held by Lukoil Bulgaria gas stations.

The moratorium has fueled suspicions of very close ties between Bulgaria's Prime Minister Boyko Borisov and the head of Lukoil Bulgaria Valentin Zlatev, whom the opposition has described as "the country's back seat ruler" and "the oil oligarch, who pulls the strings of the government".

The cabinet has also reduced temporarily the obligatory fuel reserves distributors are obliged to keep in a bid to drive down the end consumer price.

Thus, by the end of April 2012, Bulgaria will no longer have fuel on stock for 60 days, as it is at present, but for 50 days. By the end of April 2011, the minimum required amount will be fuel on stock for 40 days. After that, between April 2012 and April 2013, the fuel stock will be increased again to be enough for a period of 60 days.

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Tags: moratorium, Russia, diesel, Lukoil, Bulgaria, Valentin Zlatev, Boyko Borisov, Prime Minister, Traicho Traikov, Economy Minister, Simeon Djankov, finance minister, fuel, fuel prices, fuel reserve, fuels, transport companies, protests, gas, Transport Minister Alexander Tsvetkov


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