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Eterna Law

SOPHIA BUSINESS CENTER, 6 RYLSKIY LANE, 01601 KYIV, UKRAINE
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Almaty, Kiev, Moscow

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Pricey, lousy, but domestic. Can Ukraine Say “No” to EU Petrol?

September 2011

On 6 September 2001, the Ministry of Economy of Ukraine is to hold a public hearing on a special investigation into the imports of oil products (A-76/A-80, A-92, A-95 petrol, and diesel fuel, fuel oil, furnace oil, paving bitumen), which may result in protective duties and higher fuel prices.

The investigation was initiated in January 2011 on application of the Ministry of Fuel and Energy following an oil refinery’s request.

According to Oleh Malskyy, Partner at AstapovLawyers International Law Group, “Not only will additional duties fail to prevent possible growth in petrol prices, they will make the fuel much more expensive instead”.

Economically, once the duty is imposed, the prices of imported products will skyrocket in the domestic market, and local manufacturers, given their current standing, will not be able to efficiently “substitute” for the imports. The applicants demand that the Ministry of Economy introduce a 25% duty. If fuel imports from Europe are concerned, it will therefore add 25% to the European price (on average, it is now UAH 17 and UAH 15 per litre for petrol and diesel, accordingly).

“Domestic oil refineries, due to their obsolete facilities, will not be able to quickly pump up the output, which is expected to carry the risk of low-quality domestic petrol shortages giving way to expensive imported petrol. As we are unable to make the Euro-5 grade, high-quality petrol price will definitely take off if the duties are imposed. So, the question of what comes first - quality or manufacturers - is going to be under discussion in the days ahead,” Oleh Malskyy noted.

Soaring oil product prices will, in turn, lead to growth in prices for other consumer goods and speed up the country's overall inflation rate. Average consumer will suffer greatly, being made to buy a costly and poor product falling below European quality standards.

“It is notable that special investigations recently initiated in Ukraine are designed to help national manufacturers regain their market positions after the global financial crisis. So, in the last few years Ukraine has been showing a trend of abusing the right to special investigations, specifically those inspired by domestic manufacturers regardless of whether a particular import causes them real damage,” Oleh Malskyy added. “Therefore, national manufacturers are not good-faith players in the market, and Ukraine’s policy encouraging protectionist practices generally violates the obligations it assumed on accession to WTO.”

In this case, AstapovLawyers International Law Group represents the interests of all Belarusian importers and their Ukrainian subsidiaries with a share of more than 40% of the total oil product imports into Ukraine, namely: Belarusian Oil Company, BNK-UKRAINE, NAFTAN, Mozyr Oil Refinery, Belorusneft, Belorusneft-Ukraine.


For more information, please contact Yulia Larina, PR Manager, AstapovLawyers: +38 (044) 490 70 01, pr@astapovlawyers.com



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