The shareholders of Transoil Group took the decision to keep the current producer price of 29.1 lei (VAT included) for a bottle of "FLORIS" sunflower oil

The shareholders of Transoil Group took the decision to keep the current producer price of 29.1 lei (VAT included) for a bottle of "FLORIS" sunflower oil

24.05.2022

Since Trans-Oil Group has kept its promise not to raise the price of refined sunflower oil sold on the domestic market during the 60-day period commencing March 1, 2022 and despite the losses the Group continues to incur in the sale of sunflower oil on the domestic market (as reported by the Competition Council as well), the shareholders of Transoil Group took the decision to keep the current producer price of 29.1 lei (VAT included) for a bottle of "FLORIS" sunflower oil, sold on the domestic market of the Republic of Moldova, a price which has been valid since declaration by the Parliament of the Republic of Moldova of the state of emergency.

This decision comes as a response to the huge impact of rising prices on staple goods and underlines the social orientation of the Group's business in the Republic of Moldova. The company will continue to apply the price capping throughout the state of emergency, declared and extended by the Parliament of the Republic of Moldova.

We urge the retail chains and other distributors to show solidarity with the efforts of Trans-Oil Group and those of the Government of the Republic of Moldova and to apply a minimum profit margin on the social product "FLORIS", which is of a major economic importance for the society.

Earlier, we welcomed the decision of the Commission for Exceptional Situations (CSE) to add the refined vegetable oil to the list of products of social importance and to apply a mark-up ceiling. We believe that this decision will result in a lower shelf price of sunflower oil and will prevent the distributors of FLORIS sunflower oil from engaging in abusive practices.

At the same time, we ask CES to immediately repeal the decision no. 21 of May 18, 2022, according to which VAT amounts for goods and services purchased and used for the export of sunflower oil are excluded from deductible VAT. The right to VAT deduction and reimbursement in export transactions is a fundamental principle of the VAT system, enshrined in the Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (with a separate title dedicated to it), which the Republic of Moldova has undertaken to implement according to the Association Agreement.

Deprivation of this right entails double payment of VAT both in the exporting country and in the country where the goods are imported.

This is an unprecedented situation and a flagrant violation of a fundamental economic right, targeting exclusively a domestic producer having shareholders in the United States of America, including Oaktree Capital Management LP - one of the largest asset managers worldwide.

The decision not to reimburse VAT is a vicious practice of nationalizing the profits of a private company, which could be interpreted as a direct and unjustified threat against the conduct of business in a liberalized market economy.

We informed the development partners of the Republic of Moldova about the negative impact this decision has on the Group's operations, but also on the investment climate and the external perception of the Government's efforts for structural reforms.

We call on the authorities to engage in an open dialogue aimed at reaching a compromise and strengthening the efforts of all parties to contain the rising prices.