BACI stated its position to the National Assembly

BACI stated its position to the National Assembly in connection with a draft of the Bill on administrative regulation of economic activities related to crude oil and petroleum derivatives. As a result of joint efforts with other organizations, the position was adopted and MPs excluded solid petroleum products from the scope of the law when it was adopted.

 

With a letter to the National assembly, BACI expressed its concern in respect of a draft of the Bill on administrative regulation of economic activities related to crude oil and petroleum derivatives, filed in the Secretarial Office of the National Assembly under Number: 854-01-16 on 07.03.2018 (hereinafter referred to as the Bill).

The Bill envisages extremely onerous conditions for storage, transportation and trade in petroleum and petroleum derivatives, without having regard for the specifics and diversity of petroleum products and their derivatives.

The way the text of the Bill is drafted, the scope of the Bill covers solid petroleum products, viz. bitumen, asphalt and petroleum coke (pet coke), the trading in and use of which are not of public interest, and in respect of which it is unjustified to apply the strict administrative requirements laid down in the Bill. As evident from the reasoning to the Bill, the main objective of the law is the intention to ensure “fair competition on the market of liquid fuels” and reduce the grey sector.

Pet coke is a solid non-volatile residue which is obtained in the distillation of heavy petroleum fractions, with CN code 27131100. In its appearance, pet coke does not differ from coal. Pet coke falls within the scope of the Excise Duties and Tax Warehouses Act but a special excise duty rate is not determined in respect of it; instead, the rate for “equivalent fuel” is applied. In terms of characteristics and use, coal is the closest to pet coke. Pet coke is used by our members, the Bulgarian cement producers, as fuel in the kilns for the production of clinker. Thus, the Bill concerns all BACI members. The industrial consumers of pet coke are registered in the National Customs Agency as end users exempt from excise duty, while the companies carrying out trade in pet coke are registered under the terms and procedure of Article 57a of the Customs Act.

Given that there is no production of pet coke in Bulgaria, the cement producers rely on imports by sea (at the ports of Varna and Bourgas), river shipping along the Danube and, after that, road haulage.

We are of the opinion that the onerous requirements laid down in the law towards wholesale traders and carriers of solid petroleum products in respect of minimum capital and provision of bank guarantees, as well as the specific requirements vis-à-vis storage of petroleum products, are unjustified in respect of solid petroleum derivatives such as pet coke. The requirements will render trade in this product extremely difficult and will place the Bulgarian cement producers using these products in an unfavourable position compared to their European competitors.

In some EU member states (e.g., Belgium, Germany, Greece, and others), pet coke does not fall in the scope of the provisions of the excise duties legislation, respectively, in the scope of the laws concerning trade in liquid fuels. This is so because in its essence pet coke, as well as the other petroleum solids and derivatives, have nothing in common in terms of use and substance with liquid fuels, so that making them the object of the provisions of the Act on Administrative Regulation of Economic Activities Related to Crude Oil and Petroleum Derivatives is unjustified.

Therefore, given the above, BACI kindly requested whereby the MPs exclude the solid petroleum derivatives from the scope of the Bill.

As a result of joint efforts with other organizations, the position was adopted and MPs excluded solid petroleum products from the scope of the law when it was adopted.