The Parliamentary Public Finance Commission has failed to propose any major improvement in tax regulation supporting the use of biofuels yesterday, proposing only a cosmetic cut in excise tax, while raising fines for oil companies for not blending of bio-component and increasing farmer subsidy for planting rapeseed from EUR 45 to 90 per hectare.
Our view: We would expect a negative impact of the news, as the market expectations were running high, on politician’s promises of making biofuel competitive to standard fuels. The progress in putting up new regulations is slow, even though we welcome increasing fin for not complying with obligatory blending. We remain our conservative stance, expecting ElstarOils to export its first biodiesel production in 2007. We keep unchanged our earnings forecast and valuation for the stock.