Attacks on Andrej Babiš fuelled by bio-petrol, diesel support proposal

So called biofuels form a small part of ANO leader and finance minister Andrej Babiš’ business empire. But it’s a sector that is heavily under scrutiny as government agreed proposals to extend fuel support come before the lower house of parliament.

Andrej Babiš, photo: Filip Jandourek

For the last month finance minister Andrej Babiš has been under pressure for what his opponents claim are clear moves to tailor government legislation so that it benefits his agro-chemical group Agrofert. The claims centre on a proposal to extend tax benefits for so-called biofuels, and not just any biofuels at that, but the ones that Babiš’ companies are primarily producing.

Former finance minister and deputy leader of TOP 09 Miroslav Kalousek says Agrofert stands to benefit to the tune of around 5 billion crowns from the extended support for the current range of biofuels, which he adds, are in any case a blind alley for the long-term development of environmentally friendly forms of alternative fuel.

Biofuels are themselves an environmental and economic hot potato. Produced from sugar beet, rapeseed, maize, and wheat, these fuels were around a decade ago seen as the only real alternative to fossil fuels in the transport sector. And targets were set to promote them, such as the 10 percent EU target for biofuel use in the transport sector by 2020. Then, as yellow rapeseed started to colour the Czech countryside, there came the backlash that these demanding bio crops were forcing food prices up and leading to soil deterioration and erosion.

So far the Czech Republic has advanced pretty well towards meeting the 2020 EU targets. Biofuel accounted for 6.0 percent of Czech fuel consumption in the transport sector in 2012, just above the EU average. But the continued incentives are needed to attain the final target.

Meanwhile, the EU itself is trying to adjust its biofuels policy. It admits that the so-called first generation biofuels, based on food or animal crops, are not the best path to follow. But the second generation founded on converting wood and other biomass are not fully up and running and the third, based on algae, are even further into the future. Babiš has defended himself by saying that the main responsibility for drawing up Czech biofuels legislation lies with the Ministry of Agriculture, though it’s clear that the finance ministry was heavily involved in shaping the latest proposal.

Unfortunately for Babiš there’s another aspect to the conflict of interest accusations as well. The finance ministry exercises control of a series of state-dominated firms, including fuel distribution company Čepro which also has the responsibility for purchasing and mixing the bio-fuels going into diesel and petrol. Agrofert owned biofuel company Preol is the main supplier of biofuels to Čepro. Together with another Agrofert company, it supplies around 55 percent of Čepro’s biofuel needs.

The finance ministry exercised its control a few months ago to change the top team of managers at Čepro. So demands are now circulating that the finance ministry offload its responsibility for some state-controlled companies, with the Ministry of Industry and Trade set to benefit the most. Andrej Babiš, not surprisingly, is vigorously resisting those demands.