Czech-German fuel tussle breakthrough creates new problems

A breakthrough of sorts has occurred in the ownership tussle over millions of litres of fuel stocked by the Czech state strategic reserves authority in Germany. But the go ahead to ship the contested fuel back to the Czech Republic is now causing headaches on its own.

Photo: J. Linka / Czech Television

It looked like a good idea at the start. Instead of storing fuel more expensively in the Czech Republic, the state authority for strategic reserves would make use of cheaper storage space in Germany.

There was quite a lot of spare capacity because reserves previously built up by NATO in Western Germany in readiness for a war were now excess to requirements and could be freed up for other purposes. NATO had also by the way established a pipeline system across Germany to make sure fuel could get to where it was needed.

So it was that in mind that an original deal with the Germany company Viktoriagruppe from 2004 was altered six years later and in 2010 around 1.0 billion crowns worth of fuel was transported to the storage facilities at Krailling, in southern Germany. Even before then, some concern had been voiced about the opaque character of the Germany company’s owners .

But the real worries about the exiled Czech reserves began to mount in 2014 with reports that hundreds of millions of the Czech fuel could not be found at the German reserves and bills and owed taxes from the Viktoriagruppe had not been paid. Worse was to come at the end of 2014 when the group announced that it could no longer meet its debts.

For most of 2015 the Czech strategic reserves agency, the Administration of State Material Reserves, has been trying to prove its ownership of the diesel reserves to a skeptical German insolvency administrator. The Czech side is also seeking compensation for around 6.3 million litres of diesel which appears to have disappeared from the storage facilities with criminal proceedings lodged related to that in Germany last December. One theory is that it might have just evaporated.

Jakub Linka, photo: archive of Administration of State Material Reserves

Now in what has been described as a breakthrough decision, the German insolvency administrator has agreed that the claimed Czech reserves can be shipped back to the country. However, he has set a deadline for the end of April for this to happen and the Czech side says this is simply not possible to do. This is what spokesman for the Administration of State Material Reserves, Jakub Linka, had to say:

“The deadline of April 30 set by the insolvency administrator for the removal of the diesel is simply unrealistic. It was admitted as much in previous talks that to take the diesel away would require six to eight months. Given that the rail track is damaged, we are looking at other means of removing the fuel.”

That logistical operation could, for example, require 2,500 lorries with cisterns plying the roads between southern Bavaria and the outskirts of Prague. And there is still the fundamental fact that Czech ownership of the fuel has not been finally recognized.

The Czech Republic is not the only country which stocks strategic fuel reserves in other countries. Neighbour Slovakia, for example, stocks some of its fuel in the Czech Republic. And the Czech national energy regulator has also in the past raised another worry, that some of the fuel reserves stocked in the Czech Republic are on behalf of foreign companies and that in case of an emergency they will not be available to meet local needs.