Alternatives & Analyses: Political Economy of Complacency – the scandal with the unreported crude oil imports
The hot topic of the day, with immense repercussions, covers a possible manipulation of statistics on the import of crude oil. This is not a trivial, petty opposition talk, but a fundamental issue about the credibility and trustworthiness of Bulgarian state institutions.
The ball started rolling with the permanent boasting of Borisov, who drew attention to the difficult to explain statistics on the current account, which suddenly registered a record surplus. Many would remember that the Borisov government was unhappy with the former head of the National Statistical Institute – Mariana Kotzeva and fired her. She is now the head of the Eurostat, which makes things even more intriguing as if the NSI data has been manipulated, then the Eurostat’s ones are equally misleading. The current NSI chairman since 2014 is Sergei Tsvetarski. The replacement of Marianna Kotseva was interpreted as a bad sign since the NSI is like the Bulgarian Central Bank – it requires professionalism above all. If there is a problem with the NSI data, it does not necessarily mean that the issue rests with the statistical institute alone, but it is equally valid that if the statisticians have not sounded alarm, when something so obviously odd as a sudden drop in imports of crude oil is happening, then they become accomplices in the blame chain.
There is no way the finance minister Goranov or the head of the NSI could avoid responsibility.Suffice it to double-check data and compare the crude oil exports from Russia and crude oil imports to Bulgaria, and the difference would stun.There is some scope for explaining sustained levels of refining and refined product sales against a drop in imports – if the strategic reserves have been tapped. However, there is no evidence that this is the case – neither the strategic reserves, not the refinery’s own reserves have shrunk dramatically. A decline of 42,2 % in the value of crude oil imports, against an 11 % lower average price of the Urals blend – referenced to the Brent MED Platts, does not make things easier to explain.
These articles analyses and comments are made possible thanks to your empathy and contributions, which are the only guarantors of independence and objectivity in our work. The Alternatives and Analysis team.
There is no corresponding decline in whole or retail refined products’ sales, which leaves us with only one possible explanation – without us noticing, Bulgaria had become a significant producer of crude oil in 2019, making it self-sufficient.The government is in deep trouble, and the only logical explanation is that this manipulation is deliberate, meant to paint a picture of accomplishments. There is a demand at the top for success stories and the apparatchiks deliver.One possible escape route is via excuses with the methodology, unintended technical errors, which might buy time but would not solve the problem. I do not see how the NSI could explain the striking difference between the collapse in crude oil imports, the continued levels of refining and sales of refined products, and their exports. Unless imports at the Rosenets crude oil terminal dropped sharply due to lapses in the measurements and metering instruments, or improper reporting on the side of the refinery, opening up the chain for the most massive black market for refined products in Bulgaria’s history.
Lukoil will be hard-pressed to provide the answers as it is a publicly listed company on international stock exchanges, and such reporting games will cost them too much, to say nothing about their auditors.The ball can’t be left entirely in the refinery’s court for improper reporting as the General Customs Department and the Revenue Agency, as part of the Ministry of Finance, should independently control, report and verify import and export date. People will remember that the former head of the Customs Department Vanyo Tanov died in strange circumstances, after a long dispute with the refinery over measuring devices.Here are two possible explanations – either half of the crude oil imports is not declared and further processed in the black, starting the largest in the history of Bulgaria’s black-market refined fuel fraud involving Lukoil, or the NSI manipulates statistics.
In the economy, all sectors are interdependent as docked vessels, reduced imports, reduced processing, reduced trade, reduced consumption, reduced energy intensity, etc. At any rate, the scandal is just starting to brew – wait to see the reactions at the EU, IMF, and World Bank level. Watch also how the rating agencies.
The effect on Bulgaria’s entry to the EZ will be immediate.Sic transit Gloria Mundi.Earlier this year, I warned that the government would not fall because of pressure from the street or the toothless parliamentary opposition, but under the weight of its own corruption and irrelevance. Who would believe that Borisov, with his long track record of business with Lukoil, has been kept in the dark on this?Switch on the countdown counter. Give it a week.
Ilian Vassilev
Thank you for your donnations via PayPal and bank transfers to IBAN BG58UBBS80021090022940
the Alternatives and Analyses NGO.
Thanks for another informative web site. Where else could I get that kind of info written in such a perfect means? I have a challenge that I’m just now running on, and I’ve been on the glance out for such information.
Great blog here! Also your site rather a lot up very fast! What host are you the usage of? Can I get your associate hyperlink for your host? I want my web site loaded up as fast as yours lol
I like the helpful info you provide in your articles.
I’ll bookmark your weblog and check again here regularly.
I am quite sure I will learn many new stuff right here!
Best of luck for the next!