DIESEL AGAIN KINDLES PASSIONS AND THOUGHTS
The high diesel prices in Bulgaria has again aroused dissatisfaction among the local carriers against the background of oil prices permanently going down on the international markets. Officials of the Confederacy of Auto Transport Unions (CATU) announced at the beginning of the week that trading one litre of diesel against BGN2.05 is undue.
The price should be BGN1.7, value-added tax included. When a barrel of naphta cost USD55 and the excise duty in Bulgaria stayed at BGN535, Lukoil used to sell 1,000 litres of diesel for BGN1,572. One barrel is currently priced at USD50 while the company trades 1,000 litres for BGN1,894 which is an increase by more than BGN300. A BGN60 increase in the excise duty is present indeed but a surplus charge of BGN240 remains which makes for BGN0.22 per one litre, Krassimir Lalov, member of CATU's managerial board said.
Just a day later the reaction at the part of Bulgaria's only refinery sprang up. The Lukoil-Bulgaria's public relations office announced the following: Statements of all kind and sort that diesel produced by Lukoil-Neftochim Burgas as of today should cost as much as it used to be two years ago are wholly devoid of foundation as two completely different fuel types and categories are being compared. As a result of large-scale investments, the refinery has gradually shifted to the production of fuels having lower sulfur content which meet the Euro-4 emissions standard and it is ready to shift to the Euro-5 standard. The company's investment scheme in regard to meeting Euro-5 is USD265 million for 2008 alone. The fuel sold today is completely different in terms of type, quality criteria and prime cost in comparison to that sold two years ago.
Company officials also pointed out that an increase in the fuel prime costs is in practice impossible to be carried out under the entirely liberalized fuel market conditions and in the presence of at least five refineries in the neighbouring countries. However, along with making this statement Lukoil decreased the fuel prices. Diesel price flagged by BGN0.04-0.05 to BGN2.0 per litre while A95 is already sold at BGN1.85, down by 3% or BGN0.06. The high-octane A98's price also dropped by 3%.
Nevertheless it is hardly believable that the conflict with the carries will dwindle just like that. The carriers stated that they are seriously pondering over blockading the roads to filling stations and other centres of Lukoil and its distributors with their vehicles. And they will await for the November 22-23, 2008 Bulgarian Socialistic Party congress to pass in order to avoid arousing suspicions that their move is a political mission.
Is diesel sold in Bulgaria expensive? According to BANKER's inquiry over the Ministry of Economy and Energy's website, naphta wholesale prices are really and truly the lowest ones among the European Union countries. The price was EUR0.97 per litre as of November 19, 2008, duties and taxes included, with only Lithuania surpassing us with EUR0.96. Diesel is priced at EUR0.97 too in Cyprus, and at EUR0.98 in Latvia and Romania while in Slovenia and Luxembourg it costs EUR1.0, and EUR1.01 in Spain and Estonia. The most expensive naphta of EUR1.33 is on sale in the U.K.
The situation, however, is quite more different if we take a look into the Ministry's statistics regarding the retail prices. The Shell and OMV filling stations in Bulgaria sell diesel for approximately EUR1.05 while Lukoil sells it at EUR1.033 per litre. The fuel is significantly cheaper in Ljubljana and Bucharest where it is available at respectively EUR0.976 and EUR0.975. And the price in Skopje is EUR0.891 per litre. These lower prices in the Balkan countries most likely arouse dissatisfaction among the Bulgarian carriers as their routes pass mainly through these countries. And it is yet to be revealed to what extent will their serial conflict with Lukoil escalate and will the state have to intevrene again