The Cabinet of Ministers Accidentally Repeals Laws of Nature
The overhaul of laws on entrepreneurial activity has continued for several years already.
Its main goal is to remove regulatory barriers and build a new system per the requirements of market economy and the European legislation. In general, it is supposed to establish a reliable foundation for our country’s economic growth and an improved overall wellbeing.
As part of this process, the Cabinet of Ministers of Ukraine adopted in end-2016 the resolution that reasonably cancelled over three hundred obsolete legislative acts, which failed to service the current legal relations in the country and fulfil their function.
Among them, however, was one extremely important for companies and enterprises of the oil and gas sector—the resolution of the USSR State Logistics Committee “On Approval of the Norms for the Natural Loss of Petroleum Products in Receiving, Storing, Releasing and Transporting” No. 40 dd. March 26, 1986. Since no new regulatory legal act was developed thus far, it is fair to say that starting March 17, 2017, the Ukrainian legislation disregards the norms of natural loss of oil products in receiving, storing and transporting, effectively making economic entities book their oil product losses to excise tax and VAT, for instance, which by itself is a legal nonsense.
According to the Deputy Chairman of the Committee for Safety, Operation, Construction and Fuel Quality of the Ukrainian Oil&Gas Association Vitaliy Horichko, the natural loss of oil products in operations is a common thing—it is due to their volatility and depends on a variety of factors: temperature, storage time, the materials containers are made of, etc. As things currently stand, it is unclear who will be responsible for the shortages identified in the inventory at an enterprise—no worker can reverse or reduce the loss in fuel volume due to natural evaporation.
In connection with the existing conflict of law, the Ukrainian Oil&Gas Association has appealed to the President of Ukraine Petro Poroshenko, the Prime Minister of Ukraine Volodymyr Hroisman, and the Minister of Energy and Coal Industry Ihor Nasalyk with the request to immediately intervene and renew the resolution of the USSR State Logistics Committee No. 40 until the replacement legal act is developed, approved and put into force in the manner determined by the Cabinet of Ministers of Ukraine. The Association’s experts also plan to involve other regulatory authorities and civil society institutions in the dialogue on this issue soon.