Банкеръ Weekly

Briefs

FUEL PRICES MAY ENDURE HIGHER EXCISE DUTY

Fuel prices are quite inflated and can bear further raise of the taxes. This is the conclusion made by MPs from the Parliamentary Budget Committee after they discussed the amendments to the Excise Duty Act, proposed by the Government.The amendments stipulate significant increase of the excise duty, imposed on fuels. The excise duty on gas oil will be increased most - from BGN110 to BGN210 per ton (91%). Excise duty on petrol with octane of up to 98 will grow from BGN300 to BGN400 per ton, and excise duty on leaded petrol with octane above 98 will grow from BGN550 to BGN650 per ton. Propane butane will not suffer from the raise of excise duty, but a road toll amounting to BGN140 per ton will be added to its price instead. Calculations show that the planned operation will lead to a BGN0.08/litre increase in petrol prices. However, the Ministry of Finance hopes this will not happen. We think that retail prices provide sufficient profits because of the low competition in this branch, said the Deputy Finance Minister, Gati Al Djeburi. Currently, fuel retail prices are equal to those in Greece, where the lowest excise duty levels in the European Union are valid. In Bulgaria, these levels should be achieved in 2007.The Deputy Finance Minister was supported by Ivan Iskrov, Chairman of the Parliamentary Budget Committee, who underlined that the domestic petrol market is dominated by four players, and the market of propane butane - by three. (The biggest fuel retailers are Petrol, Shell, LUKoil, and OMV.) According to Mr. Iskrov, each correction to the gas price causes a reaction by the petrol retailers. There was only one exception - last summer the prices of propane butane were reduced to BGN0.44/litre, but petrol retailers did not react at all.

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