Amendments to Bulgaria's Excise Duties and Tax Warehouses Act proposed by the Finance Ministry provide for an increase in excise duty rates for a number of fuels and the introduction of excise duty rates for methane and natural gas for heating purposes.

If the amendments are passed, methane, which is currently exempt from excise tax, will be levied with BGN 1.7 per GJ and will register the highest among the anticipated fuel price hikes.

According to calculations of the Customs Agency, the step will push up retail methane prices by BGN 0.048 per kg, VAT excluded, or BGN 0.06 if VAT is included.

According to estimates of Dnevnik daily, methane rates should rise by about 4%, given its current price tag of BGN 1.35-1.5 per kg.

Prices of biodiesel, bunker fuel and kerosene are also expected to go up as a result of the higher excise tax rates.

The excise duty levied on these commodities will grow from the current BGN 615 per 1000 liters to BGN 630 per 1000 liters, translating into a BGN 0.015 increase in retail prices, VAT excluded.

Natural gas for heating purposes is expected to register the slightest increase as a result of the amendments.

Currently exempt from excise tax, the commodity will be levied with BGN 0.02 per GJ as of 2012, which will add BGN 0.01 per liter to its retail price.

The Finance Ministry explained the proposed amendments with the need to ensure compliance with an EU regulation.

Asked to clarify the impact of the step, Angel Semerdzhiev, Chairman of the State Commission for Energy and Water Regulation (DKEVR) refused to comment on the tax policy of the government but said that an increase in heating rates from January 2012 was inevitable.

Natural gas prices went up by 6.67% in October.

The commodity will sell for BGN 594.37 per 1000 cu m, VAT excluded, until the end of the year.