A source of information: “Proenergia“
– Mr. Terziev, are you sleeping more soundly since you were re-elected Chairman of the Bulgarian Petrol and Gas Association?
– My re-election for a second term somehow came more logically to me compared to the situation two and a half years ago. Am I sleeping soundly? I slept soundly during the previous term. Now I think with the unanimous approval of the members of the association, I feel really confident that we will finish what we have started. And I have enough signals that we will succeed in the next two years. Even, I hope, in the first year of this mandate.
– What are your concerns?
– The political situation, which directly translates into political life anxiety and uncertainty, has made it so that in the last year there has been uncertainty in the sector, an increase in bad practices, non-payment of taxes and all the other negative phenomena that we have been talking about in the past two years. That is the thing that worries me if it continues. Yes, we were in an election period, now we are in an election cycle again, but what business really needs is peace and quiet. It needs economic growth so that we pay our taxes and the state spends it on the sick, on social activities. However, I hope that, first and foremost, it will be spent on education, because that is the subject we will be debating over the next 20 years, given the transition and the reorganisation of the world economy.
– In this regard, what do you expect from the political power – to leave you alone or to be more active?
– I have to divide the question into two parts. One part I will answer as the president of the association. I think there should be tranquillity and political stability which should translate into economic stability so that all operators work and pay their taxes.
As a private economic operator dealing with energy products, I am still hungry for activity and measures by the state to really take the fight against the grey economy and smuggling to the end so that every operator feels it directly. Because the global economy will lead to an increase in consumption, but every single one of those operating under the rules wants to see retribution. If I am to be fair to society, it is better to have peace of mind and for the other things to be brought smoothly to their logical end – for all of us to be normal European traders, responsible to our country.
– What is the biggest scourge for your business – regulatory chaos, administrative negligence or unfair practices and low blows between operators themselves?
– We have repeatedly, not for the last 2 years but for the last 6 or 8 years, checked how many regulators, laws and regulations have changed.
– How much?
– I could say 15,16 or 18, but we’ll probably find more additionally. Just adding the Energy Efficiency Act and its regulations to the group, we would probably go through 20 regulatory texts. In our industry, there are plenty of regulatory and prohibitive texts, but the oversight and enforcement function of the state is a problem. If the state applied the same standards to all operators, enabled them to comply with the laws, if they were enforceable and not bludgeons, it would lead to true market competition. The one that has invested more and the one that has made smarter moves for the coming years, not within a week or two to stea tax, excise, or just breaking some of the hazardous cargo laws, so that those that have really been wise and looked ahead have an economic advantage. The state needs to step into the role of regulator, regulations need to be used not as a bludgeon but as a nudge towards normality. This will bring calm to the sector and the consumer will feel it within a few months, I am convinced.
– So the administration is the weak link?
– And the administration at the second and third level. At the first level, the implementation of everything we have proposed, with very few exceptions, has been accepted, but the implementation in the second and third parts of the civil service structure is appalling. It is appalling, because for years, and I am not just going back to the last two to four or eight years, but the last 15 years, the state has shown, with laws, a willingness, and somehow, in mime and in sign language, it has made it clear, ‘you better not apply them, or not to everybody’. If this is stopped, I believe that we will indeed move to a new and better economic situation in our sector.
– How can that change? You say that the problem has been going on for years. It appears that they can only do so much.
– It is a question of statesmanship and a slap on the table – “So be it!”. I’ll remind you of a line, it’s more from the cinematography: ‘His head we want, death to the race. The woman, the clan, the servants and all his clan” – opening a parenthesis – there are no innocents in our sector. I have been involved in the market for 30 years, there are players who have been here for more than 20-25 years. Anyone who claims innocence and has been somewhere in another sector in another country and has done business different from what we see in the economic reality of the country is over-exposing. We are Bulgarian traders, we know our wrongs and our rights, but if he says “Stop”…I come back to an old topic – the torn tail of the lizard. We have been tearing it for many years, it must finally be torn, we must look forward, there must be sustainability, a level playing field for all – no one to call and ask for an exception. If there is an exception, it breeds vice, and we all join in that exception.
– Do you know how fuel is stolen?
– The correct question might be ‘Have you stolen from fuels?
– No, I am asking if you know.
– Everybody knows everything in this country. From nuclear power through football, they probably understand fuel theft too. As the region I work in has both farmers and state-owned companies, including mines and thermal plants, the most elementary way to steal from a fuel is to disadvantage the customer. Fortunately, in our country, at least in the last 10 years, nobody dares to encroach on the customer, the customer is not allowed to be harmed by quantity or quality. It is easiest to steal taxes and be spared requirements that the state imposes and make our product more expensive, thus having a direct economic advantage. A concrete example is to fail to meet your obligations under the emergency stockpile law or the so-called state fuel reserve. The second example is not paying in full the excise duties that are due, and not paying excise duties automatically results in savings in value added tax. It has been an open secret for years that the price of fuel is less than 50% of what the consumer pays given VAT and excise duty. When we add in the contingency fees that we have to pay, which we set aside for the next year, the cost of fuel as a cost price is 40-45% and 50-55% is taxes, levies and surcharges. So it is much easier to steal excise duty, especially when the state has not fixed itself completely or what it is doing is insufficient.
– You say the state has not fixed itself completely. Does this mean that the administration knows how to steal fuel?
– Several times in the last two years I have made more blunt statements and every time what I say, they then check it with me first. It doesn’t bother me, we’ll do it yet again. Now I will say that there is no body of government that looks into our business – starting from the revenue agencies and going through the power agencies or those that are in metrology, metering systems, transport that has not taken advantage or compromised to somebody who has abused our business. Whether or not they were directly involved and retaliated for that, we can only speculate.
– I am asking for a reason, because it appears from the government’s public announcements that the revenue side of the budget is quite strained at the moment, and the fuel companies are providing a significant portion of the revenue. Are you expecting government pressure on business and in what direction? In the direction of lightening up or crushing those companies that operate with normal business practices?
– The question is worrying. I will give an answer based on the past weeks and our meetings with the state administration. The request was that the scale would be equal to all, revenue should be given objectively and not at will. I have asked and expressed the view of the Bulgarian Petrol and Gas Association and the biggest players in the sector that there should be no batting or shifting from one direction to the other. There is an order and a way, responsible agencies and they will carry out their checks. I really hope that there will be no sudden moves, but that they will leave the business calm by making them pay everything they owe. This can be done within a few hours, I am convinced. Surely all the agencies and all the supervisory authorities are aware of the problems. To the extent that they are allowed to articulate them and say them clearly, I express my concern about that. But the commitment of the state, at least what we have seen in recent months, is that it will be done, I hope, gradually and without sudden moves.
– It seems that for years the fuel debate in our country has been going in circles – smuggling, theft, prices and so on. Do you feel that this debate is rather short-sighted and provincial? I mean, are we in the big European debate – green deal, new generation fuels, environmental protection?
– I am going to go back 100 years and forward 30 years. I am going to go back to Andresko. On the subject of the tax collector, the bad guy and the fact that maybe the Bulgarian does not want to pay for everything – I will comment that everyone who does something wrong, I will not say smuggling, believes that if only his stays, the country will be in the rut and on the honey and butter. Here would be the cornucopia. That is exactly the problem. This is the domesticism or standard of Bulgarian business, which thinks that everything should be in its own order, but mine is there, mine must stay.
– A mindset problem?
– It is a mentality that has been endorsed and encouraged these 20 years. I say 20, because I think actually after 2000 the economic transition to serious industrialization took place in Bulgaria. As for the next 30 years. The Bulgarian state as a population, and Bulgarian business, is neither prepared nor structured financially to withstand the monetary investment for all that European politicians and Commissioners are talking about. Because standing in Brussels, or in that part of Europe in general, where everything has long been done and everything has long been consumed in terms of investments and new technologies, they forget that we in the periphery of Europe cannot catch up with them so far, and what is left from now on at this fast pace.
– Have they forgotten, perhaps, because we are not reminding them?
– We have been very silent, we have been in the role of ‘yes men’ who just want a pat on the back, and that is not in recent years. This is from the pre-accession negotiations. We have shut down power plants, we have accepted to meet all the requirements without answering the question of what the consequences will be. And if this is history and we cannot go back, it was right for the last 10 years to catch up with the income of the population, because this is the bone of contention – is it expensive, is it cheap, regardless of what kind of energy we are talking about. Rather, the population is poor and they cannot afford it. I did have hope – in 2008, 2009, in the first years after EU membership, that we would catch up with the Visegrad Four countries in terms of income in quick steps. We were lagging behind Romania. And 10 years ago, when I visited Romania, it was a strange country for me, with pink roofs and fences and carts in the street. We are now behind in pensions, in average incomes and in investment. However, we do not admit it, and we explain in a somewhat flowery way how these are only the perceptions of the media and of certain specific parts of society. So we have not expressed it obviously, and I think we have yet to suffer. Bulgarian society can hardly imagine what is coming as a green deal.
– Do you think that because of our passivity there is a danger that a green wave of populism will wash over us.
– We are flooded.
– Are we going to drown?
– We are swamped. The very fact that, with the populism of 2009-2010, when we really had no say, we were a newcomer to the EU who, thanks to being accepted, had to listen, we are now pouring bio-based ingredients into our fuels that have made food more expensive. A litre of oil is BGN 3.50 to BGN 3.80, whereas it was once 80 to 90 stotinki. The next policies to be implemented are policies for rich people who have lined their pockets and think that they should have a nice, clean life. There is nothing wrong with that, but our economic advantage, even if you take it as a wage, because it remains the only thing cheaper compared to other European countries, we are losing it. When we also lose the possibly for more normal energy prices, the future is not looking at all bright. Yes, perhaps agriculture will remain, but for how long?
– Do we, with our empty pockets, have a useful move?
– We need to enter the dialogue by explaining that this is impossible. We have two hypotheses here. In one case, we will indeed go into second gear and be Europe, but we aside of Europe. The other option is to fight back and say: ‘We have been at your table for 12 years, but do not forget that our presence or our suffering will be transferred to you’. In the last two or three years, even with just this plan that has been presented, we have not put the real issues on the table, but only some wishful thinking, much of which we are not prepared to implement.
In recent days, we have seen what is happening in the energy sector. Is this a secret to anyone, and has it been a secret to politicians for the last seven or eight years? But in their reluctance to lose votes and domestic votes on the one hand and on the other hand not to lose their support in Brussels, Berlin or Paris, this has been hushed up. Here I will make a perhaps not so pleasant but correct comparison. We have ghettos in all the big cities in our country where Roma are concentrated. We pretend we do not see them, we are ready to spend a buck to give them free electricity or underpaid water, but we do not care to integrate them, to give them jobs and income, to engage them in education, to ‘think them out’ for the next 40 years. We solve it this way – just make sure this generation doesn’t breathe glue or dump their garbage straight into the river. This is short sighted, we will suffer and are already suffering from this. I think Europe needs to be shown what has happened in the Roma neighbourhoods and if they want us to look like this in their backyard, that would be sad. We must show that this attitude must be stopped and they must help us , understand our inabilities. How far this is politically justifiable for them, we shall see.