Despite difficult times, Viru Keemia Grupp (VKG) board chairman Ahti Asmann isn't predicting large-scale layoffs. Asmann believes that the current time is the most acute in the oil crisis and the other half of the year should be more successful in the oil shale industry.
The oil shale industry has been ravaged by the decrease in demand due to the coronavirus crisis, and this has caused a price war on the oil market.
VKG, which employs more than 1,600 people, has been forced to lay off 35 employees in May.
In order to remain competitive, it is necessary to keep the cost price of production low, which means optimizing costs, including labor costs, Asmann said.
"Undoubtedly, at this lowest oil price, our revenues do not cover costs and investments, but we believe that every company must be prepared for bad times and every reasonable company has certain reserves," he said. "Oil prices are not fluctuating for the first time. We are, of course, working to monitor what is happening on the oil market, but we hope that some recovery will take place in the third and fourth quarters."
Asmann doesn't consider the €14 million tax discount by the state a
discount, but rather says that during difficult times, things fall into their right places. He cited as an example that similarly to agriculture, equipment used in mining should be eligible for preferential fuel.
"The tax limits were established during good times, and they were too heavy of a burden for the oil shale industry," he said. "Undoubtedly, when production stops, significantly fewer taxes are received and a large number of laid-off people are a burden as well. It's not the right decision in my opinion."
Asmann said that with the support of the austerity policy, VKG's production volumes this year should not decrease, but rather increase on year.
According to VKG's calculations, the State Treasury should receive more than €40 million in direct and indirect taxes from the company this year.
Editor: Roberta Vaino