There are real prerequisites for fuel prices to fall by 7-8 euro cents per liter. This was said in “Why?“ by the chairman of the Association of Industrial Capital in Bulgaria (AIKB) and former Minister of Energy Rumen Radev.
In his words, this is something that the government can carefully examine. “An important condition is to maintain this fragile stability of around $100 per barrel“, Radev emphasized.
“We must realize that the prices of the main fuels for ground transport - gasoline and diesel fuel, have affected everyone. The increase in price is a fact and has affected all markets, including the US. I would say that it is there in the largest percentage terms. This clearly makes people dissatisfied“, he commented.
Radev explained that different countries are trying to impose different policies in order to support their domestic consumption and suppress inflationary processes. “This is a very difficult exercise, because it depends on what approach you choose“.
“If it is through redistribution and withdrawal from excise revenues, then with funds that you seize from everyone, you are actually supporting only a small part. I would not say that this is the best tool“, explained the chairman of the AIKB.
According to him, it is very important to constantly monitor how the supply chain is going. “The growth that we have in “Brent“ from before the war in Iran to the present moment should imply a reduction between 7 and 9% of the prices that we currently have for both diesel and gasoline“, he added.
“In recent days, it has struck me that the prices of gasoline per liter have increased in each of the member states of the European Union. In Bulgaria, we have no additional burdens - we have perhaps the most favorable excise tax structure“, Radev pointed out.
The Chairman of the AIKB explained that in Bulgaria, during the first 15-20 days, we had a smaller growth and smaller change in the prices of gasoline and diesel. “There was some waiting among traders - let's not forget that one of the largest refineries in this part of Europe operates in our country. This also allows for a certain buffer“.
“After that, however, prices escalated and started in almost complete synchronization with the general growth in “Brent“. Then we had a permanent decrease of about $15 per barrel“, he commented.
“It is still too early to have any impressions of the new government, since technically they only had one Friday. We will gain impressions very soon. Let's see how the next echelon of power begins to be filled - deputy ministers, agency directors, etc. This will definitely show whether there is teamwork in this government“, Radev said.
According to him, in order to solve problems, one must work in teams. “I am skeptical about individual will. No matter how capable, capable, knowledgeable, physically healthy and all other superlatives we have heard from people close to Prime Minister Rumen Radev about him, governance is a team effort“, he pointed out.
“The biggest advantage of having all the power is that you have the opportunity to achieve policies that you believe in, ideas that you are convinced of, mechanisms through which to implement them. This is a solid plus. The solid minus is that you bear all the responsibility“, commented the chairman of the AIKB.
Radev pointed out that it is precisely this combination - plus and minus, that is what the business addresses as expectations for this cabinet. “We expect to work with a cabinet that will not justify itself with one or another conjuncture, structure within the parliament, view of interested groups, lobbying circles for one or another decision“.
According to him, business requires the cabinet to take into account the geopolitical situation and environment, but also with the goals that are set for the development of the country.
“I always want to be objective. The fall of the “Zhelyazkov“ cabinet happened both because of the budget and because of our active participation in this process. But also "Let's not forget that it also happened because of the extreme dissatisfaction among the people, caused by complacency in making certain management decisions, including in preparing budget estimates," Radev said.
According to him, the dissatisfaction with the failure to listen to the needs of the wider community led to the fall of the cabinet.
„Our number one criticism of the budget is that it is extremely unjustified to plan future debt issues with which to cover social payments. This is suicidal,“ said the chairman of the AIKB.
He explained that Finance Minister Galab Donev spoke about taking on new debt to pay pensions and social benefits. “I strongly hope that it was said in a completely different context - within the framework of what is being done as periodic additional financing and payment of current debts. I hope that it is not about taking on new debt to make permanent social benefits“.
“At a meeting of employers' organizations with “Progressive Bulgaria“, which was attended by Rumen Radev, Galab Donev and the party's economic team, it was said that in order to work for prosperity and better welfare for everyone, including workers and employees, we must go through a healthier economy. This includes economic growth, a healthy Bulgarian industry and the service sector, so that we can have income“, Radev said.
“In order to stop the helicopter handing out of money, we need to go back to A and B - that is, to what is important so that we can have a sustainable economic environment“, he believes.
According to Radev, in any case, bureaucracy must be reduced and administrative procedures simplified, especially when it comes to small businesses.
“We need to limit the corruption pressure, which is constantly being talked about and for which Transparency International gave an extremely poor assessment in its latest report“.
“The corruption pressure on business is strong - especially on smaller businesses. In big business, excluding those that depend on public procurement, things are different“, Radev explained.
According to him, the majority of big business in Bulgaria does not live on public procurement. “The real manufacturing big business in Bulgaria is the one that exports and whose products and goods consumers vote for every day. And it is these foreign markets that ensure the remuneration and investment policies of enterprises. So this seems to happen less with them“.
“In those that depend on public procurement, all these concerns are present. That is why I am glad about what the Minister of Innovation and Digital Transformation Ivan Vassilev said. As far as I understand, one of his tasks is to examine public procurement through certain models“, he commented.
According to him, the words of the Chairman of the General Assembly of the Bulgarian Chamber of Commerce and Industry Vasil Velev are an interesting expression, that in 2 years we have eaten and drunk one nuclear power plant. “In Bulgaria, we always bring it up around nuclear power plants, especially in the company of eating and drinking“.
“What Velev obviously means is that we have an anticipatory growth in official income pumping - as if this will make things better. This was a process strongly provoked by the union leaders“, Radev believes.
“We strongly hope that the automatic increase in salaries will be dropped in the new budget. So far, there are such indications both in terms of average wages and the minimum wage," he explained.
Radev explained that employers are against automatism. "This is how a certain level is automatically decided, without taking into account economic reality at all. We are not against wage growth. This motivates workers and employees, as well as entrepreneurs, to do what they do."
"It is one thing to set a ceiling for markups and set a certain percentage. It is quite another to develop the administrative capacity with which to monitor whether this is applied - something that I am definitely skeptical about in terms of institutions. For this reason, it seems a little more unrealistic to me," he explained.
According to him, the preliminary data for April is that inflation in Bulgaria is 6.2%. “This is the highest value among the eurozone member states, which is different from the European Union member states. Romania has traditionally had much higher inflation than us for more than a year and a half - and at least 2-3% above us“.
“But compared to the other eurozone countries, we must also look at the structure. The most significant share, if we look at the period April to April on an annual basis, is in transport. This is an objective fact. We have an increase in fuel prices at gas stations, but the next such large increase is actually in healthcare“, Radev explained.
“Exactly a year ago there was a decision of the Council of Ministers, by which the hospital stay fee was reduced from 5.80 leva to 1 leva. If we were in America, we would probably say the decrease was 580%“, he commented.
According to him, if we do this recalculation without taking into account effects such as in healthcare, then we will see an average inflation level of about 3%. “In healthcare and other services, we would be about a percentage point lower“.
“We are also observing something similar in another area - insurance and financial services. We have a significant increase in bank and insurance fees“, he added.
“I have no direct impressions of the work of the special manager of “Lukoil“ Rumen Spetsov. In any case, the way in which we once laid down the role of a special manager in the law assumed teamwork. This way, through a special manager, the logistics of the supplies of different types of oil could be ensured and they could be blended in an adequate manner according to the technological capabilities of our refinery. At the same time, efficiency was maintained“, commented the chairman of AIKB.
In his words, this is not a simple exercise. “Whether Spetsov created a team and to what extent he relied on the commercial resources in the refinery - that is difficult for me to say“.
“I will allow myself one assumption based on indirect data - one of the criteria for the efficiency of our refinery is what comes out of it as the most expensive and most refined fuels. This is aviation fuel - kerosene. In fact, the quantities have even increased slightly and it is no secret that a significant part goes to our allies. During military operations, planes do not fly with water. This also affects the price of kerosene. From this point of view, the operational state of the refinery is not bad. I have not heard of any deficits for our airports“, Radev explained.
According to him, the worst-case scenario for “Lukoil“ by the end of the year would be if the global interests of the US and Russia diverge.
“The States could harden their tone and stop extending the transition periods until a new strategic investor is selected for these capacities. Then there is a risk that the investor will be purely financial, whose only goal is capitalization through the sale of individual assets and separate parts. This would be a tragedy“, he believes.