Turkey has toughened the requirement for bank guarantees needed to import diesel in a bid to crack down on what it sees as an increase in tax evasion and smuggling, the customs minister said on Thursday.
The move, which came into effect late last week, is more likely to hit small importers in the short run and create a bottleneck at ports, but it could also damage even big importers' ability to bring in cargoes, traders say.
Diesel importers will now have to obtain a letter of guarantee for each diesel cargo they bring in, and the amount of the letter will have to cover the full value of the cargo plus taxes.
"There was a problem in collecting the Special Consumption tax of these cargoes," Minister Hayati Yazici told reporters, adding that some firms that imported the fuel failed to pay the tax incurred. "We have just started this" measure.
Energy-hungry Turkey consumed around 319,000 barrels per day (bpd) of diesel in 2012, a 6.1 percent increase from 2011, according to Turkish industry figures and data from its energy watchdog EPDK.
Around 175,000 bpd of that amount was imported, making Turkey the biggest importer of the fuel in the Mediterranean market. India, Italy and Greece were its biggest suppliers last year.
OMV Petrol Ofisi, Shell Turcas, BP, Koc Holding's Opet and Total are among the biggest diesel buyers in Turkey.
Traders said the new move was going a bit too far, however, because it usually takes at least six to seven months to obtain a bank letter of guarantee.
"It is a bit of a harsh measure. It hits companies that have been abiding by the law as well," one trader said.
Another Istanbul-based trader said, "If you think about a company which imports like seven to eight cargoes a month, you're talking about millions of liras worth of bank guarantees. That would stretch both the banks and the companies."
Market players expect the government to amend the regulation to avoid slowing or hampering much needed diesel imports.
"Smaller companies could halt diesel imports in the short run as they don't have such a cash balance required by this new regulation. But if it stays in effect longer, the financial burden would accumulate and even harm bigger companies," the second trader said.
Customs Minister Yazici said there were no plans to change the amount required for the bank guarantee.
"But we can help speed up the processing and the refund time of these bank letters. We are working closely with the Finance Ministry on this issue," he added.
Source:- in.reuters.com
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