Measures for reducing fuel prices discussed

The meeting between Minister of Economy, Energy and Toursim Delian Dobrev and Director General of LUKOil Bulgaria Valentin Zlatev lasted four hours within which the two discussed the possibility for reduction of fuel prices in the country. The meeting was initiated by Zlatev. He entered the ministry at 16.00 hrs. and left shortly after 18.00 hrs. Zlatev was laconic about the possibilities for having cheaper fuel in Bulgaria. "There are two option - the Government to impose a moratorium on the price increase or the refinery to begin operating at a loss," said Zlatev after the meeting.

The meeting became inevitable after the prices of fuels at the refinery's own filling stations reached the critical price of BGN 2.69 per litre of petrol brand A95N, BGN 2.67 per litre of diesel and BGN 1.28 per litre of propane-butane.

"We may reduce VAT on fuels, but the Government will hardly afford it during the severe financial difficulties," Andrey Delchev, Chairman of the Bulgarian Petroleum and Gas Association, commented a few hours before the meeting. Asked by Klassa daily about the other measures to be discussed, he said that the Association was not aware of these. "If there are any other proposals, they are an initiative of Zlatev. I am also waiting for information from the meeting," Delchev said laconically.

The problem is that an eventual reduction of VAT on fuels will pose difficulties for the fulfillment of the revenue side of the budget. It is known that the indirect tax has the largest contribution to the Treasury. The Burgas-based refinery accounts for most of the revenues from VAT, pre-estimated at some BGN 7 bn this year. This means that if VAT on fuels is reduced by 1%, the budget revenues will decerase by about BGN 700 mln.

The second option is to reduce the excise duty on fuels. The obstacle for the implementation of this measure is that Bulgaria has the commitment to reach the minimum levels of ceratin excise duties in the EU and has not done this yet.

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