PETROL MYSTERIES EMPTY THE TREASURY
A NEW SCANDAL BETWEEN OWNERS OF FILLING STATIONS ALONG E-80 HIGHWAY AND THE TURKISH BUSINESSMAN FUAT GYUVEN IS RIPENINGThe almost 10-year conflict between owners of petrol stations along the international highway E-80 in the region of the Bulgarian-Turkish border and the entrepreneur of Turkish origin Fuat Gyuven is about to break out, the BANKER weekly learnt. On one side are about a dozen of petrol dealers, on the other - the emigrant of Turkish origin, who is presently one of the most powerful businessmen in Southeastern Bulgaria. According to data of the National Statistics Institute, his firms account for more than a third of the export of the Haskovo region.The apple of discord are the petrol filling utilities of Shipka-Fuat Gyuven EOOD in the Duty Free Zone - Svilengrad and the border check-point in Kapitan Andreevo. Apart from these two strategic locations on the road between Asia and Europe, the businessman owns as well filling stations in the Duty Free Zone - Vidin and at Kalotina. All of them sell the fuel, exempt of customs and excise duties and VAT, which reduces drastically the prices as compared to those on the domestic market. The diesel oil for example is sold some BGN0.50 cheaper. And the prices as compared to those in Turkey are almost 3-fold lower. Quite logically, the TIR-trucks driving from or to Bulgaria prefer the cheaper fuel.According to the petrol dealers who are discontent with Gyuven, sone 1,200 TIR-trucks, 600 buses, 800 cars, and 300 mini-buses, cross each month Bulgaria's border with Turkey. Most of them buy fuel from Gyuven. However, they are aware that in end-2002 the term of the special contract, signed in 1992 between the Finance Ministry (the principal of the Free Zone in Svilengrad) and Fuat Gyuven, elapses. By that deal the entrepreneur then practically got green light for the development of his large-scale projects. Therefore, according to pundits, this time the battle between the Bulgarian owners of oil-stations and Gyuven will be merciless. Practically, the pledge is the survival of one of the parties.The attraction of the deputies' attention is just a part of the strategy of petrol traders in their battle with Fuat Gyuven. They have sent a signal to the Finance Minister Milen Velchev, the Head of the Chief Tax Directorate Nikolai Popov, and IMF's Resident Representative in Bulgaria Piritta Sorsa about violations of the customs and taxation regime.Gyuven's first petrol station along the border was built in 1993. Since then each government has threatened to cancel the contract, but Fuat Gyuven always managed to dissuade them. Yet, in the beginning of 1999 his petrol stations temporarily suspended their operation after the enforcement of the currently efficient Customs Act, which cut down the tax preferences for excise duty goods, traded in the duty free zones. However, this did not last long. Just a few months after the Customs Act was promulgated, UDF's government passed amendments to the transitional and final provisions of the Regulations for the Application of the Excise Duties Act. Under the changes, the filling with liquid fuels and lubricants in the duty free zones and border check-ponts is considered export. The excise duty, paid when they are purchased, is refunded to the trader within 30 days after submitting a declaration to the tax authorities. The then ministers justified the amendment by the presumption that automobiles for international transportation were filling at the duty free petrol stations, and they would use the fuel abroad. However, it did not become clear why the TIR-trucks that bought fuel from Gyuven were also relieved of paying road toll and eco dues when passing through Bulgaria's territory. Moreover, the UDF cabinet amended also the Regulations for the Application of the VAT Act, rendering the sale of fuels in duty free zones VAT-exempt. Thus, the State practically undertook to refund the entire amount of excise and VAT to Fuat Gyuven, paid by him when purchasing the fuel from Neftochim AD - Bourgas.Giving preferneces to one businessman, the State voluntarily deprives the Treasury of significant revenues. According to rough estimates of the protesting petrol dealers, per each ton of diesel oil, sold by the duty free filling stations, the budget loses BGN110 from excise duty, BGN180 from road tolls, BGN14 from ecology taxes, and about BGN180 from VAT. About 8,000 t of fuels are traded monthly in the Svilengrad zone, and up to 6,000 t at Kapitan Andreevo. Another 4,000 from the Vidin zone and 6,000 t from the filling station at Kalotina should be added. Thus, in just 30 days the budget is deprived of almost BGN11.5MN, or almost BGN140MN annually. There could hardly be a doubt that the incumbent Govenment will face a still more difficult choice. Shall it renew the contract for duty free trade in fuels with Gyuven, for whom NMSII's coalition partner MRF lobbies, or shall it take the side of the protesting petrol traders? According to inofficial information, the Finance Ministry is trying to find a solution that would allow the operation of the duty free petrol stations to continue. The difficulty here is how to cushion the reaction of the opposition, which would find a new suitable occasion to attack the reform in the customs after the scandal connected with picking up the British consultants Crown Agents has calmed down. But neither BSP, nor UDF could stir much noise on the matter as names of BSP deputies were said to lobby for Gyuven in the beginning of the 1990s, while the latest permission for the operation of petrol stations in the duty free zones and border crossings as of 1999 was signed by former premier Ivan Kostov's finance minister Mouravey Raved. In the final reckoning, more and more fuel will be leaking past the Treasury while the rulers' petrol mysteries continue.