Bulgarian PM Assumes Full Responsibility for Lukoil Saga

Energy | August 5, 2011, Friday // 10:05|  views

Bulgaria' Prime Minister, Boyko Borisov, has been the one to give green light for the revocation of the license of the Lukoil Bulgaria company.

The decision to revoke the license of Lukoil Bulgaria has been made personally by Prime Minister, Boyko Borisov.

The statement was made by Borisov Friday, in an interview for the morning show of the TV Channel Nova Televizia, in which the PM further pointed out there was no discord in the cabinet over the decision.

The country's leader pointed out the plan to fight the gray economy and the smuggling of fuels included the installation of electronic measuring devices to be connected to the National Revenue Agency, NRA, by all producers, distributors and in all storage facilities.

Borisov revealed that about a month and a half before the expiration of the deadline to install the above said devices, he had met with the Director of the Customs Agency, Vanyo Tanov and Deputy PM and Finance Minister, Simeon Djankov, to discuss how to deal with Lukoil, after it had become clear the company had no intentions to abide by the law. The PM had asked to be informed on the exact parameters of the law in such situations and then had given the green light for the revocation of the license.

Borisov further informed that Lukoil will install the devices by December, saying he had talks with the Lukoil CEO, Vagit Alekperov, who had offered apologies to Bulgaria and assured the company will invest in September about BGN 1 B in the refinery for the said devices.

"I do not want to be a lawyer or a prosecutor. I have an explanation as to why Lukoil failed to pay their corporate taxes for the last two years, but I would not offer these explanations for them. Until they install the devices – we will monitor them and they will work without a license – it is their own fault," the PM declared.

Regarding his rumored close friendship with the Lukoil Bulgaria CEO, Valentin Zlatev, he explained the two had played cards several times and Borisov had always been the one to win.

"I called him to congratulate him in his newborn baby girl. He was not too happy with me, but our personal relations are not that important," the country's leader said, talking about Zlatev becoming the proud father of a second daughter on August 1, in the middle of the developing Lukoil saga.

When asked if there were disagreements and discord among different ministers regarding the issue, Borisov declared: "The first time I sense there is such thing the culprits will be removed on the spot. Immediately and they know it. The moment someone opposes a colleague, he is gone."

The PM's comments came on the heels of wide-spread reports that the Lukoil issue had stirred a strong conflict between Djankov and the other Deputy PM, Interior Minister, Tsvetan Tsvetanov.

Two days ago, Bulgaria's Customs Agency logged an appeal against the rule of the Sofia City Administrative Court, ACSC, to reinstate the license of Lukoil Bulgaria to operate excise warehouses.

On Monday, the Sofia City Administrative Court (ACSC) stopped the preliminary execution of the Customs Agency decision on the withdrawal of Lukoil's license and the closure of the only refinery in the country.

The crude oil processing plant in the Black Sea city of Burgas can work under the conditions preceding the punitive measure of ACSC until the Supreme Administrative Court (VAS) decides on the appeal lodged by the Customs Agency.

According to a report of the state-owned TV channel BNT, little after Lukoil was officially given the green light, the tanker terminal started servicing incoming and outgoing oil tankers.

After the refinery was stripped of its license, over the failure to install electronic measuring devices, the oil processing installations of the plant were switched into hibernation mode, which allowed it to start working at full capacity within 8 hours after the Court permit.

Although Lukoil resumes operations at full steam, customs inspectors will keep monitoring the refinery and the Rosenets Oil Terminal, as well as a number of other sites, as announced in July.

Customs units will continue to keep track of the volumes of unloaded crude oil and of final products sold by the refinery and send reports to the Customs Agency headquarters in Sofia.

The Lukoil saga drew widely divergent reactions from legal experts, with some saying that the preliminary execution ruling takes effect immediately, while others insisted that the act of the Administrative Court Sofia City did not enter into force until the 7-day appeal period expired.

According to a statement of the ACSC, "The (two) rulings have not taken effect, they can be appealed through an interim appeal filed within a seven-day period before the Supreme Administrative Court."

Last Saturday, the cabinet released 1 800 tons of jet fuel from the State reserve, destined for the airports of Varna and Burgas, where the summer season is in its peak. Volumes for Burgas were also redirected from the airport in the second largest city of Plovdiv. The order of the cabinet is for the release of jet fuel, kept in the Lukoil Bulgaria warehouses, for a week-long consumption. On Wednesday, additional volumes of aviation fuel from the State Reserve, to last for 10 days, were unblocked.

Economy and Energy Minister, TraichoTraikov and Djankov count on import from abroad to secure normal supplies for gas stations while the Interior Ministry will continue to receive for a month longer the fuel it had already ordered from Lukoil.

Last Friday, Borisov, announced that crisis headquarters will monitor the situation on Bulgaria's fuel market after the local refinery of Russian oil giant Lukoil was forced to halt operations with Traikov heading the headquarters.

Vanyo Tanov, Director of the Customs Agency, has explained that the refinery cannot operate without the required electronic measuring devices Lukoil failed to install in its storage facilities, and can deal only with the fuels already outside the plant.

Valentin Zlatev, CEO of Lukoil Bulgaria, has often been described as "the country's back seat ruler" and "the oil oligarch, who pulls the strings of the government".

He is suspected of being the man behind Bulgaria's PM, something both Borisov and Zlatev firmly deny.

Meanwhile, the Commission for Completion Protection, KZK, announced they are probing Lukoil for a possible cartel situation on Bulgaria's fuel market.

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