In late February, the European Commission sent a letter to the Estonian authorities requesting clarifications on the state aid granted to AS Olerex. The proceedings were initiated six months ago at the request of AS Terminal to investigate distortions of competition in the Estonian fuel market.
According to the complaint filed by AS Terminal, the Estonian state has granted unlawful state aid to AS Olerex, allowing it to avoid complying with the biofuels obligation for fuel sales for several years. This undermines the European Union’s objective of moving towards greener transport as well as distorts competition in the market.
On 20 February, the European Commission sent a letter to the Estonian authorities asking them to provide its own facts and reasons in the Olerex case, in order to assess whether the state aid favoured the company and thereby distorted competition in the market.
“In order to ensure fair business and competition, it’s important that an independent assessor in the form of the European Commission has started its own proceedings, as the local authorities that supervise the fuel market have so far done their job poorly,” said Raido Raudsepp, Member of the Management Board of AS Terminal. “The advantage Olerex has gained by not complying with the biofuels obligation has affected competition by harming all other market participants as well as retail consumers, who have paid a higher price for the fuel.”
Meeting the requirement set forth in the Renewable Energy Directive imposes additional costs on fuel companies. According to the Estonian Transport Fuels Union, the failure to act by the Estonian state supervisory authorities has allowed Olerex, which has not complied with the biofuels obligation, to benefit by up to €35 million per year. On top of this, there would be up to €20 million a year in fines, which the Estonian state has not been able to collect on such a scale.
As a result of the financial gains, AS Olerex has been able to increase its market share and profits at the expense of its competitors. This in turn has led to a decrease in competition between market players and higher fuel prices for certain consumer segments.
The Estonian authorities have publicly cited shortcomings in the law as the reason why AS Olerex has not been fined in full for its multiple breaches of the biofuels obligation from 2021 to 2023. Supervising compliance with the law is a core task of the state and the Estonian authorities certainly cannot use their own failures as an excuse to grant unlawful state aid.
The family-owned company AS Terminal has been operating since 1968, when it started as Tartu Naftabaas. Today, the company operates two Estonian liquid fuels terminals, is engaged in wholesale liquid fuels trading and operates 46 service and automated petrol stations across Estonia, employing more than 300 people.