Банкеръ Weekly


Lukoil and Petrol Win BGN60MN State Contracts

That the fuel market in this country is a free one, believe only controlling bodies. Consumers are convinced otherwise, but have no right to be heard. Distributors themselves know the arrangements between themselves, but have no reason to make them public. And it is not necessary, since even the kids can see that their prices are synchronized and the lions pie equally distributed.

In this line, for example, is the sum of BGN30 million the state spends each year to fuel cars of ministries and the dozens of their gencies, committees and other bodies. This lucrative order is reserved for Lukoil and Petrol. Other players just do not take part in the bidding. The two companies were selected in 2011 for the provision of petrol and diesel to the government in a competition procedure which clearly showed how to make procurement tenders with a preliminary selected winner. After the scandal dies down, Finance Minister Simeon Dyankov opened a new auction, which to choose the distributors for2013 and 2014. So without much ado, recently they simply signed new contracts with Lukoil and Petrol which ensure them at least BGN60 million in revenue.

In addition to fuel, as of next year, theselected companies will deliver also car care products and automotive lubricants for the automobiles of the state administration. This became possible after at the end of April, the Council of Ministers extended the scope of action of the Central Authority for Public Procurement. The reasons for these changes were that this way the body will improve its performance and its interaction with ministries. In practice, however, it comes to ousting the small players in the race for state money and favouring the large enterprises.

What are the exact benefits of the new items on the list of the contract is hard to say, since the announcement of the contract does not give estimates figuress. Moreover, the tenders for antifreeze, windshield washer fluid, perfumes and preparations for cleaning upholstery have almost always undergone the procedures of the ordinance on small contracts or directly through direct negotiations, so it has been difficult to say how much money agencies spend to maintain their fleet nor to whom exactly they give the money. But having in mind the thousands of vehicles which serve the state administration, we are inevitably talking here about significant sums.

Despite its many weaknesses and the lack of any competition, the agreements with Lukoil and Petrol will still give the administration some benefits when purchasing fuel. They will be in the form of discounts of no more than 5 to 10 cents per liter, but this is still something. Another question is whether they will actually use them. The BANKER daily found that many institutions now calmly surround this framework agreements and purchase fuels directly through the Sofia Commodity Exchange.


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