Ukrainian oligarch Kolomoisky declared war on the Belarusian fuel

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Украинский олигарх Коломойский объявил войну белорусскому топливу

Ukrainian company “Ukrtatnafta”, which belongs to the Ukrainian businessman Igor Kolomoysky, demands from the Ministry of economic development and trade of Ukraine to limit the presence of Belarusian oil products.

In a special statement on this occasion, the company “Ukrtatnafta” refers to the energy strategy of Ukraine, according to which not less than 50 percent of domestic demand for petroleum products in the ecological class not below Euro 5, must be of Ukrainian origin. The Belarusian oil products are considered on a par with Russian and restrictions on delivery are offered under the slogan “ensure energy independence from Russia”.

Under the slogan of energy independence

According to the company “Ukrtatnafta”, a member of the group “Privat” Igor Kolomoisky, the rapid growth of oil imports over the last 12 years has caused the termination of the majority of Ukrainian oil refineries.

The Privat group owns three Ukrainian refinery Nadvirna (Ivano-Frankivsk region), Drohobych (Lviv oblast) and Ukraine’s largest Kremenchug oil refinery in Poltava region. However, only the last – Kremenchug refinery – recently, in 2016, mastered the production of fuel in accordance with Euro 5 standard. But the return position in its market, the company can not, therefore, have asked for state support in the form of anti-dumping investigation with the subsequent introduction of quotas on deliveries of oil products to Ukraine.
 

Kremenchug refinery, illustrative photo

In particular, since may 1, it is proposed to restrict the import of oil products from Belarus and Russia at the level of 50% (about 90 thousand tons per month of gasoline and 250 thousand tons of diesel fuel), and from 1 July to 30% (75 thousand tons per month of gasoline and 200 thousand tons of diesel fuel). From 1 October deliveries of oil products from Belarus and Russia should not exceed 30% (55 thousand tons of gasoline and 150 thousand tons of diesel fuel).

Of all deliveries to be made in excess of the quota, “Ukrtatnafta” proposed to levy increased customs taxes for 29.3% of the customs cost of gasoline and 30.7% – diesel.

Ukrainian geography of supply of petroleum products

Ukraine gets oil products in several countries. Mostly in Belarus, Russia and Lithuania.

According to experts, now part of oil products from abroad in Ukraine is 60 to 80 per cent, of which Belarus is a leader in fuel supplies 3,678 million tons per year. From Russia comes 2,462 million tons, from Lithuania – 849,645 tons.

In the total trade of Belarus with Ukraine, the supply volumes of hydrocarbons of various types make up almost half of it in monetary terms. According to the official statistics of Ukraine, in the last year from 3,205 billion dollars Belarusian export share of petroleum products amounted to 1,823 billion. From Russia, Ukraine has supplied these products to 1,263 billion, from Lithuania – on 679,8 million (for Lithuania petroleum products supply to Ukraine is also a basis of mutual trade, even larger than Belarus in terms of percentage).

Belarus not worried yet

The Belarusian side reacts to the initiative of the company Igor Kolomoisky. First, the previous attempt of “Ukrtatnafta” to limit competitors in Belarus in 2012 with the help of the anti-dumping investigation was unsuccessful. The interdepartmental international trade Commission rejected similar statement. Secondly, everyone understands that the limitation of foreign supplies can cause fuel crisis. It is on this fact and hopes the Belarusian side.
 

Igor Sokol

“At the level of trade relations would not be affected, as all determined by the user. From such restrictions, Ukraine will only make it worse their consumers. By the way, we at the Embassy are always asking where you can buy Belarusian petrol. Because the demand determines the volume of supply on the market. If you just take and limit, will decrease the volume of deliveries to a specific market and therefore will increase the price of fuel,” – said in an interview with the Freedom of the Ambassador of Belarus in Ukraine Igor Sokol.

Experts: Kolomoisky wants monopoly

Ukrainian experts are convinced that the company Igor Kolomoisky, offering limitations under the slogan “to ensure energy independence from Russia”, in fact, trying to establish a monopoly on the market.

“Restricting imports will enable the group” Privat “to occupy 50% of the market of diesel fuel and almost 100% of the gasoline market. In fact, a monopoly. What it promises to consumers, no need to explain – the import duty will add 5 hryvnia to the cost of fuel per liter”, – said Director of Consulting group” A-95″ Sergey Kuiun.
 

Sergey Kuiun

In addition, the expert believes, even if the Kremenchug refinery will be fully loaded and will process approximately 7 million tons of oil, the peak for consumption of the fall season is unlikely to avoid shortages.

Most concerned about the requirements of the Igor Kolomoisky enterprises of mining and metallurgical complex, which consumes up to 8 percent diesel fuel.

“Our direct and indirect losses will exceed 2.5 billion hryvnia, and the consequences will be felt by every citizen through a new round of inflation, devaluation and so on. We believe that in order to satisfy the ambitions of one of the producers, even if it is a whole industry, it is clearly not worth it. If you want this field to help – there are countless other mechanisms until the direct state support, but this should not be at the expense of other industries and of the population”, – said the head of the Federation of metallurgists of Ukraine Sergei Belenky.

Contrary to the rules of the WTO

According to President of the petroleum Association of Ukraine Dmitry kulika, the initiative “Ukrtatnafta” will cause a shortage of fuel and will destroy all diversified system of oil products to the Ukrainian market.

“Today we get the fuel from the 10 directions and have forgotten what the crisis. The restrictions will lead to higher prices for all consumers and runs a chain of inflation,” he says.

Lawyers also protect the authorities from violating international obligations of Ukraine in the framework of the world trade organization.

“In 2013, we imposed restrictions on the import of cars, and Japan is the decision contested. As a result, we were forced to cancel them. Now we can step on the same rake. But then we were relatively “young” member of the world trade organization (WTO), and we could understand and forgive us, but if we repeat this, we are regarded as a malicious violator of international trade rules”, – said the representative of one of legal firms of Ukraine Angela mahinova.

Waiting for the denouement

The final decision to initiate or not an antidumping investigation – the Interdepartmental Commission on international trade will be taken until April 23. The main danger lies in the fact that even if the results of the investigation are not in favor of the company Kolomoisky, at the time of the meeting still to be announced prior restrictive measures.

The Ministry of economic development and trade of Ukraine has refused to comment on possible future reaction to the statement “Ukrtatnafta”.

“After receipt of the application the Interdepartmental Commission on international trade takes the decision to open or not to open a special investigation. In the case that will begin such a procedure, information about this will be published in the newspaper “Kurier kuryr”, – said “Freedom” in the Ministry.

According to Ukrainian legislation, the period of carrying out anti-dumping investigation shall not exceed 270 days and in extreme circumstances it may be extended up to 330 days.

“If the increase in imports in Ukraine occurs to such an extent or on such terms that cause or is at risk of significant harm, in order to protect the market, the Commission may approve the use of special measures in the form of the introduction of import quotas or by establishing special duty on the goods which is the subject of this investigation”, – stressed in the Ministry of economic development and trade of Ukraine.

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