The production of biofuel as a single possible way to rescue of SE Ukrspirt

According to official statistics, in 2014 the production volumes and alcohol sales exceedingly declined, which posed the menace for the domestic industry existence.

Last year the export volume of alcohol reached only 200 thousands of dal, and 14, 5 millions of dal have been sold within the country. For comparison, in 2013 the volume of domestic sales constituted 22 millions of dal of alcohol. According to the experts, a single effective way to handle the crisis of the industry is the transition of the plants to the production of biofuel.

It is worth mentioning that according to the analysts’ estimations, which reckoned on the legislative acts and market indices, the annual demand for biofuel at present constitutes about 300 thousands of tonnes. Presently, the equipment of Ukrspirt enables to produce 165 thousands of tonnes of bioethanol annually. Unfortunately, the enterprise does not work at its full capacity and the volumes of bioethanol production amount to 50 thousands of tonnes in 2013, and 21 thousands of tonnes in 2014.

The imperfection of the Ukrainian legislation is the major factor which has led to that situation. In particular, up to now the question of bioethanol taxation remains inexplicit. The inspection body cannot reach a consensus whether it is appropriate and reasonable to refer bioethanol to biofuel and impose the tax of 99 euros per litre, or refer it to alcohol with the tax of 70, 53 hryvnias per litre. The increased excise rate on alternative petrol slows down and hampers the biofuel production.

The market experts consider that the high taxes on the alternative types of fuel explained by a desire to increase the budget, caused by the existing lobby of oil raiders, which is not willing to admit the expenditure of the niche occupied by biofuel. 

The creation of a trilateral working group empowered to regulate the tax legislation inspires some hope and cautious optimism for a favourable resolving of the situation, and for the rescue of the industry. The representatives of SE Ukrspirt, the Ministry of Agricultural Policy and a number of oil raiders became members of this group. According to the available information, in the issue of the first three sessions, the decision was made to levy the excise on the domestic biofuel at a level of 5% - 10% of the petrol excise.