site.btaParliament Passes Controversial Statutory-Capital, Collateral Requirements for Oil, Petroleum Products Traders

Sofia, July 11 (BTA) - On Wednesday, Bulgaria's Parliament passed conclusively provisions of the Act on Administrative Regulation of Economic Activities Involving Crude Oil and Petroleum Products, imposing requirements for minimum statutory capital and collateral on wholesalers and retailers of such goods.

Paid-up statutory capital of assets amounting to at least 1 million leva will be required for registration for wholesale in crude oil and petroleum products. The minimum paid-up statutory capital or property requirement for retail will be 20,000 leva, the law provides.

Distributors of liquefied natural gas (LNG) will be required to own at least 10,000 gas cylinders.

Applicants for registration (except for transport of crude oil and petroleum products and agricultural producers) will also be required to furnish a collateral for outstanding payables in the form of a cash deposit or an unconditional and irrevocable bank guarantee amounting to 500,000 leva for wholesale and storage of petroleum products, 20,000 leva for each retail establishment, 20,000 leva for gas cylinder filling, and 100,000 leva for gas cylinder distribution.

The National Front for Salvation of Bulgaria (NFSB) objected to the simultaneous requirements for minimum statutory capital and collateral. "It is the same as if you are required to furnish 1,000 leva as a collateral against future fines for traffic violations when you obtain your driving licence," commented Yordan Apostolov MP of the United Patriots. He argued that these collateral requirements will result in business concentration and an infringement procedure against Bulgaria by the European Commission.

"Of the small traders list you're giving me, 117 persons owe the Exchequer 270 million leva, this is the way we can collect this money," said Emil Dimitrov MP of the United Patriots, who chairs the parliamentary Committee Monitoring the Revenue Agencies and on Combating the Parallel Economy and Smuggling and who tabled the bill. "Between the first and second reading [of the bill], we reduced the statutory capital [for wholesalers] from 3 million to 1 million leva, and from 200,000 to 20,000 leva for gas distribution," he pointed out. "The only requirements for drivers of fuel-carrying motor vehicles are a driving licence, a serviceability clearance for the truck and insurance," Dimitrov noted, adding that "this will not cost them even a lev more".

"Anybody who can prove ownership of property worth 20,000 leva can obtain collateral from any commercial bank of his choice for a fee of 300 leva and can operate as a retailer of fuels of whatever quantity," Dimitrov explained. He sees this as a solution to the issue concerning small filling stations. He noted that, as promised, agricultural producers will be able to store fuel in up to 50 cu m tanks.

The Minister of Economy will be entrusted with the administrative regulation of economic activities involving crude oil and petroleum products, according to another provision adopted on Wednesday.

The bill has triggered a heated controversy. Its opponents see it as being custom-made to serve the interests of large fuel suppliers. Small operators have protested, warning that the draft legislation will force them out of business. In a strongly worded statement on July 3, NFSB leader and Deputy Prime Minister Valeri Simeonov called the bill "disgusting" and "lobbyist" and said it caters to the interests of several large fuel companies and particularly Lukoil.