Bulgarian Supreme Court to Rule on Lukoil License Case

Energy | August 10, 2011, Wednesday // 11:10|  views

Image from a protest against high fuel prices in Bulgaria earlier this summer. Photo by BGNES

Bulgaria's Supreme Administrative Court (VAS) is expected to rule Wednesday on the revocation of Lukoil Bulgaria's license to operate excise storage facilities.

The information was reported by the Bulgarian Sega daily, citing their own sources.

Meanwhile, in anticipation of the VAS decision, the Customs Agency has published their appeal claims to VAS against the rule of the Sofia City Administrative Court, ACSC, which reinstated the license on the grounds the only refinery in the country, owned by Lukoil, should continue work because the opposite would cause serious harm to the economy.

The Customs say there is a threat for the State treasury to loose large revenues over the failure of Lukoil to install the mandatory electronic measuring devices since it allows the company to sell fuels without paying the owed excise. They further point out Lukoil Neftohim has given them a bank guarantee, but it covers only 25% of the excise.

On August 3, Bulgaria's Customs Agency logged an appeal against the ACSC rule to reinstate the license of Lukoil Bulgaria to operate excise warehouses.

On August 1, 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 resumed operations at full steam, customs inspectors continue to monitor the refinery and the Rosenets Oil Terminal, as well as a number of other sites, as announced in July.

Customs units are keeping 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."

On July 30, 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 Finance Minister, Simeon Djankov, insist the country can 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.

On July 29th, Prime Minister, Boyko 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.

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