Energy Ministry lobbies for duty on imported fuel
Kyiv, January 19 (Interfax-Ukraine) – Ukraine's Energy and Coal Industry Ministry is initiating the introduction of antidumping duties on imported fuels: at EUR 130 per tonne for petrol irrespective of the country of origin and at EUR 80 per tonne for diesel fuel, according to Kostiantyn Borodin, the director of the ministry's oil, gas and oil refining industry department.
"The heads of six oil refineries addressed Energy Minister Yuriy Boiko in a letter, requesting the introduction of antidumping duties on fuel irrespective of the country of origin," he said at a press conference at Interfax-Ukraine in Tuesday.
"We back this position and are initiating the imposition of antidumping duties, [via] an antidumping investigation on oil products supplied to the Ukrainian market."
According to Borodin, the letter was signed by the heads of all operating oil refineries in Ukraine, who under other conditions are "implacable rivals."
"The seventh has been standing idle since 2005. Moreover, it belongs to a large importer. This is the Kherson oil refinery," he said.
He said the energy ministry has already submitted an inquiry to the Economic Development and Trade Ministry for a special investigation.
"This process has already begun," he said. "The time frame [for introducing the duties] we see now is about a month and a half, but we hope that the duty will be imposed earlier."
Borodin said that the antidumping duties are needed to safeguard domestic producers, whose position has become shaky now.
"As of today, the export duty on crude oil from Russia is about $303, oil is supplied to Belarus and Kazakhstan without any duty. In Russia the duty is reduced by $100 to $216 per tonne if oil is refined domestically and fuel is exported. This deliberately puts refineries in uncompetitive and unfavorable positions," he said.
According to Borodin, Russia, Belarus and Kazakhstan are pursuing a protectionist policy for their oil refineries, due to which they have managed to win a 68.4% share in fuel imports to Ukraine.
"We're looking at the real threat of losing domestic fuel producers and of staying with importers face-to-face without any tax-based leverage on them, and without any new jobs to be created by them in Ukraine," he said.
He said the introduction of the duties would help reduce the level of imported fuel on the Ukrainian market to 10%, which is the same as the level of fuel supplies from the European Union countries to Ukraine.
As was reported, Deputy Fuel and Energy Minister Ihor Kiryushyn on December 6, 2010, said that Ukraine was mulling duties on imported fuel at at least EUR 120 per tonne. However, a week after, some mass media published a letter dated December 8, 2010, from Energy Minister Yuriy Boiko addressing Ukrainian Prime Minister Mykola Azarov, which was supported by most of the Ukrainian oil refineries. Boiko suggested levying duties on imported fuel irrespective of the country of origin. He proposed duties to be set at EUR 130 per tonne of petrol, EUR 80 per tonne of diesel fuel and EUR 40 per tonne of liquefied gas. The Ukrainian oil refineries believe that the duties will help boost oil refining and encourage the modernization of refining facilities.
At the same time, the Finance Ministry and the Economic Development and Trade Ministry believe that the duty could affect the Ukrainian fuel market, considerably reduce the import of oil products, and cut tax receipts to the national budget.
Large gas station chains, which mainly import fuel, also criticized the introduction of the duties, stressing that the measure would translate into the monopolization of the market by the Ukrainian oil refineries, as well as trigger price hikes of fuel to UAH 10 per liter for A-95 petrol and to UAH 9 per liter for diesel fuel with the current prices of oil in the world. Concern over possible duties was expressed by the embassies of Lithuania, Romania and Poland in Ukraine in a letter addressed to the Ukrainian prime minister.