Lukoil Bulgaria Suffers Setback in Court

Bulgaria's Finance Ministry and Customs have won an important round in their legal dispute with Lukoil Bulgaria over the installation of electronic measuring gauges.

The Bulgarian "Sega" (Now) daily informs that the Supreme Administrative Court, VAS, has rejected Lukoil's claim against the requirement to mount meters at all entrance and exit points of its petrol bases in Karnobat, Vetren, Stara Zagora, Ihtiman, Plovdiv, and Iliyantsi.

All these petrol bases of Lukoil Bulgaria are connected to the company's pipeline linking the Lukoil Neftochim refinery in Burgas to the Iliyantsi petrol base.

The final court rule will be of key importance for the case against the decision of the Customs Agency to strip Lukoil's tax warehouse license for the pipeline.

The case was adjourned after Lukoil Bulgaria argued against the requirement on grounds it makes the work of the Customs easier, but overburdens the company with excessive costs amounting to BGN 1 M.

Lukoil Bulgaria has further claimed it has been subjected to discrimination as it is the only company in the country having a tax warehouse and a pipeline passing through a number of different Customs jurisdictions.

The magistrates have rejected the arguments on grounds Lukoil Bulgaria has failed to provide any proof for the claimed cost of BGN 1 M, all while in order to assess its excessiveness, there was a need to compare it with the revenues and the profits of the company.

The VAS panel also pointed out that the many branches from the pipeline to different bases created the necessity of measuring gauges in order to have reliable control. They also rejected the discrimination claim with the motive Lukoil is precisely the only company in the country to own a pipeline connected to a tax warehouse.

At the end of April, the Bulgarian Customs Agency withdrew the fuel storage and transportation license held by Lukoil Bulgaria, due to grave violations in accounting for volumes passing through its network.

According to a Customs Agency release, Lukoil had until March 31 to implement all measuring devices on their facilities as required per regulation.

A number of inspections by the agency in April found that such devices were missing at some locations, with diversion pipes placed at others to circumvent installed measuring devices.

Lukoil Bulgaria appealed the decision.

The company, Bulgaria's by far largest producer and seller of fuels, has until June 1 to meet similar regulatory requirements for the Rosenets oil terminal in Burgas.

The terminal was the cause of a prior license saga between the Customs Agency and Lukoil Bulgaria back in 2011.

Among other things, the way the controversy was hushed back then reignited speculations about the alleged close relations between Lukoil Bulgaria CEO Valentin Zlatev and then Bulgarian PM Boyko Borisov.

Just one day earlier, Customs Agency head Vanyo Tanov was dismissed from the post by the Socialist-endorsed government.

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