Experiments are not a bad thing, as long as someone pays the bill

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Newspaper interview “Banker” with Grisha Ganchev, businessman and owner of the Petrol gas station chain

Mr. Ganchev, one of the most discussed topics this week is the idea announced by the government to create a State Oil Company. The main argument for this decision, made by Finance Minister Vladislav Goranov and Economy Minister Emil Karanikolov, was concentrated ownership of tax warehouses and high fuel prices. There has even been talk of building new tax warehouses to which all small importers and petrol station owners have access. How do you evaluate this decision?

– I welcome the enthusiasm of the government and its unique idea. We live in a free country where everyone has the right to embark on a business of their choice and try to implement it in the best way they think. And if the bill comes out, everything will be fine …

As for the intention to build new bases to become tax warehouses, according to the information I have, there are currently 20 in the country with a capacity of 1.2 thousand tons that are not working and are empty. And another 10 have already been scrapped. At least that tells me that there is no need for new ones.


If, however, the analysts in this project decide that they need to build new warehouses, how much would it cost to build 2-3 such, for example?

Given that the price for 1000 tons is one million euros, and if it is estimated that there is a need for new warehouses for 50 thousand tons, for example, this means 50 million euros. However, it is not clear to me who needs such spending.

The ambition of the government is, in addition to the bases, to expand the network of gas stations. The announcement was also for 100 new sites to cover the whole country. Is there such a need? And how much money will go into it?

– If they have judged so … At the moment there are 3300 gas stations in the country, all of them tied to the National Revenue Agency. Some of them, especially in small settlements, still find it difficult to survive financially. Suppose the new state-owned oil company builds these 100 new gas stations. In order for them to really look like gas stations, and not just be hose columns, at least 100m euros must be spent.

It is clear from your words that this is a rather large-scale investment. In what period could it be returned?

– Such an investment at best can be repaid within 25-30 years. But since the state has the power and can afford it, it would certainly not be bad to consider a new refinery, which may not have the capacity of Lukoil – 12 million tons, and half – 6-7 million. tons. This would also be an interesting investment.

You’re kidding, aren’t you?

– No why? Given the good contacts of our top leaders with the Arab world, especially with Saudi Arabia, even oil concessions can be negotiated. It is not known whether oil deposits will be discovered in the Black Sea as well. They’ve been looking for them for ten years, haven’t they? If we dream a little more, we may see our transformation into the oil tiger of the Balkans. Does anyone know?

The conversation went in a very funny direction, but still let’s go back to the topic of the day and answer me how much is earned from the oil business and is it worth the state to commit to investments in this direction?

– As I said, she has the financial strength and the right to make such decisions. But to be specific on the issue of profits in the oil business, I will make a simple calculation. And you draw your own conclusions. Currently, sales of petroleum products in Bulgaria annually reach a total of 3 billion liters. Two billion of them are from diesel fuel, 500 million – gasoline, and 500 million gas – propane butane and methane. 2.5 billion liters pass through the 3,300 gas stations a year. This figure, divided by 12 months, shows that an average of about 63,000 liters are sold per gas station per month.

And now comes the bills: BGN 63,000 to BGN 1.60, the average price is equal to BGN 100,800. From here on, the deduction begins – BGN 63,000 are excise duty and VAT. BGN 37,800 remain. At least four people must work in each site, ie. a minimum of BGN 3,600 is allocated for a salary. BGN 34,200 remained. From it we subtract the price of the fuel itself, which is BGN 31,500, ie BGN 2,700 remain. But that’s not all – each gas station pays BGN 380 for internet and collection, plus another BGN 760 for electricity, water, building tax and road infrastructure fee, because the sites are next to their roads. And what was left in the end? Some nothing and no 1560 levs. And if there are no financial costs, such as investment loans, etc. How do these numbers sound to you?

What do you say you don’t actually make money from a gas station?

– With all these costs, you understand that directly a gas station can make a profit of BGN 20,000 per year. And that, if you do not consider the initial investment.

In that case, won’t the state’s expenditures for its new structure turn out to have a rather negative result?

– It is not my job to do the accounts of the state. That is why there are many smart people who have harnessed their strength to make calculations and analyzes. I just say how things are in this business when I run it. And as you know, I am the oldest in this craft. Otherwise, experiments are not a bad thing, as long as there is someone to pay the bill.

One of the leitmotifs of the ministers who presented this decision to the cabinet was that fuel prices would fall as the state-owned company entered the market. How acceptable do you think this pressure on private sector competition in a market economy country will be?

– I do not deny that somewhere the prices may be a little lower, but this is due to the type of retail outlets where fuels are offered. I’m telling you, it’s not the same to invest in a gas station or in a shed with two gas stations. Ultimately, the user chooses where to stop. There is a place under the sun for everyone. The important thing is that the bill finally comes out.

Finally, for what is said that the fuels in the chains were expensive, I want to say that for some, brandy is also expensive. And I suggest the state to consider creating an alcohol holding …

Bulgaria





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