BACI addressed official letters to the attention of official Prime-minister, the official Deputy prime-minister of Public order and security and Minister of interior, Ministry of economy, State agency “State reserve and war-time stocks”, Union for private economic enterprise, in connection with the amendments to the Crude Oil and Petroleum Products Stocks Act (the ‘Act’), adopted in June 2020.
With them, in the scope of those obliged to maintain certain levels of stocks of petroleum products for emergency situations are included traders who import petroleum products other than fuels. The scope of obligated persons has been expanded in a way to cover practically all local and foreign natural and legal persons – traders who import or perform intracommunity acquisitions into the territory of the country oil and petroleum products under Annex A, Article 3.4 of Regulation (EC) 1099/2008 and for heavy fuels.
With this amendment, business entities that import oil coke, such as the members of BACI, also become obligated persons, and for them the Act stipulates that they store boiler fuel as exceptional stocks – a product completely different from the ones imported by the cement producers.
This legal injunction puts the users of pet coke in an extremely difficult situation, because the Act nowhere takes into account the value of the products in relation to the value of the stocks that are assigned to them for reserve.
The lowest price found by us for boiler fuel in 2021 is currently BGN 905 (nine hundred and five Bulgarian leva) per ton, excluding VAT and excise duty. This means that the obligated person is liable to buy and store fuel of a type that is many times more expensive than the product that this person uses.
Moreover, the petroleum products are excise goods and for the used products the economic entities have either registration as an excise-exempt end user or as an exempt trader under Art. 57A of Excise Duties and Tax Warehouses Act. However, for the petroleum products they should create as a reserve these persons are not exempted respectively, they will have to pay excise duty on the quantities of fuels that are subject to storage by them. In the case of boiler fuel, the excise duty is BGN 400 (four hundred) per ton, which further increases the financial burden on the obligated persons.
The Act indisputably stipulates that the stocks are created and stored at the expense of the obligated persons and that in this way the obligations of the state in its capacity as a member state of the European Union are fulfilled. However, we do not believe that the will of the legislator and the purpose of the Act is hardly the imputation and closure of such a huge financial resource of obligated persons.
The amendments to the Crude Oil and Petroleum Products Act been adopted in accordance with Directive 2009/119 / EC on 14 September 2009 imposing an obligation on Member States to maintain minimum stocks of crude oil and / or petroleum products. It obliges Member States to adopt all appropriate acts, regulations or administrative provisions to ensure the continued maintenance in their favour throughout the Community of total stocks of oil and petroleum products corresponding to at least the greater of the two values: 90 days average daily net imports or 61 days average daily domestic consumption.
Nowhere in the Directive, however, there is a provision for the replacement of pet coke with boiler fuel, but on the contrary – the possibility of maintaining petroleum coke as a target fuel is explicitly provided in Art. 9, item 2, sentence last.
Therefore, we believe that Bulgaria has incorrectly transposed Directive 2009/119 / EC of 14 September 2009 into its internal legislation.
Directive 2009/119 / EC does not in fact explicitly address this issue, i.e. it leaves it to the discretion of each Member State to:
- determine independently the scope of the economic operators that will be obliged to participate in the formation of the required level of stocks, or
- to provide that only the so-called a central inventory management structure will have a commitment to create a reserve
In this regard, it should be noted that Bulgaria according the Act has envisaged a maximum “transfer” of administrative and financial burdens for the creation of emergency stocks towards economic operators – the range of obligated persons includes all persons carrying out imports /intracommunity acquisitions (ICA) , regardless of the quantity and purpose of use (for sale, for own needs, etc.). We consider that such approach does not comply with the principles of proportionality and commensurability set out in the Directive. It is in the light of these principles that a minimum annual threshold has been introduced in some Member States below which no import / ICA persons are required to stockpile.
In addition, the Directive explicitly states that the penalties envisaged in national transposing acts must be effective, proportionate and dissuasive. Since at current the amounts of the substantial sanctions laid down in the Act can be imposed even for minor violations, we believe that in this aspect Bulgaria has incorrectly transposed the requirements of Council Directive 2009/119 / EC in the Crude Oil and Petroleum Products Stocks Act.
The global pandemic caused by the coronavirus has posed a great challenge to businesses around the world, including in Bulgaria. The members of BACI are one of the leading producers in the cement sector in the state, but providing the required amount of boiler fuel to meet the obligations under SPPPA the Act even under normal conditions would lead to significant costs for the activities of the companies, and at present will render more difficult our condition in the current pandemic situation and economic crisis. At the adoption of the amendments from June 2020 it was not taken into account that the law even without a pandemic and without an economic crisis will have a negative social function even, as this obligation would lead to additional huge investments at the expense of the social standard of employees in enterprises that are not traders in oil and petroleum products.
Therefore, BACI asked for assistance within the state authority’s competence, to take a stand on the problems created by the amendments to the Act from June 2020 and the resulting negative consequences for companies importing and realizing ICA on products other than liquid fuels.