Greece rejects profitable US oil deal

Oct 01, 2005 02:00 AM

Greece is rejecting a $ 200 mm (£ 113 mm or EUR 164 mm) annual contract to refuel the United States Mediterranean fleet. It is concerned that the oil supplies may turn up in Greece's booming illegal fuel markets selling cut-price diesel.
In the past, Greece has happily filled up the Sixth Fleet's aircraft carriers, destroyers and support vessels at Sutha Bay on the island of Crete. But the contract was cancelled after the US Navy requested clear diesel be used instead of black-dye diesel.

The navy said the black-dye diesel was clogging up their filters and causing unnecessary maintenance. But the finance ministry in Athens, which has made tax collection its top priority, has turned down the request.
Diesel used for ships is tax-free, whereas the ministry earns EUR 245 (£ 168) in tax from every 1,000 litres of road diesel. The ministry was concerned that unscrupulous dealers might divert fuel intended for the Americans onto the booming black market.

The problem of illegal diesel is a serious one and it is a major contributor to the cloud of pollution that frequently hangs over the Greek capital. Thousands of drivers are filling lorries, vans, buses and cars with diesel meant to power central heating systems because it is half the price of the legal version on sale at petrol stations.
A survey last year by scientists at Athens Technical University showed that 60 % of Athenian taxi drivers were using adulterated fuel which produces 20 times more sulphur than eco-friendly diesel.

The Americans sympathise with the Greek dilemma. But they are urging the government to reconsider.
As one US official said: "It is a big contract and a lot of money to lose."
And he made it clear that if the Greeks did not want to do business, there were several other suppliers around the Mediterranean who would be very happy to take the Americans' $ 200 mm.

Source: BBC News
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