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Environment Agency fines Estonian fuel retailer Olerex €8 million

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An Olerex gas station.
An Olerex gas station. Source: Ken Mürk/ERR

The Estonian Environment Agency has ordered fuel seller OIerex to pay a fine of €8 million for repeatedly failing to meet sale of biofuel requirements. The agency's supervision proceedings determined that Olerex sold fossil fuels in place of the biofuel component.

Misdemeanor proceedings confirmed suspicions according to which OIerex complied with fewer than 2 percent of its sustainable fuels obligation in 2022, selling over ten million liters of fossil diesel in place of diesel form renewable sources, said Olav Avarsalu, deputy director of the Environment Board.

Avarsalu added that Olerex's violation was not a light one, and the fine amount aims to make sure it will not pay off financially. "Considering also that these were repeated violations, the Environment Agency ordered the biggest single fine it has issued to date," the deputy director remarked.

The agency has punished Olerex for failure to comply with the biofuel requirement in the past. Back in 2021, Olerex missed meeting its biofuel obligation by a fraction of a percentage point and was fined €12,000, while it failed to deliver 80 percent of biofuels it was obligated to supply last year.

Avarsalu said that supervision proceedings have been effective and Olerex is on track to meet its obligations for this year.

There is also an ongoing criminal investigation based on suspicions that Olerex has knowingly presented the Tax and Customs Authority with false information about fuel it has imported. The Central Criminal Police is almost done with pretrial proceedings and will be sending its findings to the Prosecutor's Office soon.

The Competition Authority launched misdemeanor proceedings against the company this November to look into possible violation of competition rules based on a complaint by competitor Terminal Oil. The latter claimed that Olerex has secured an unfair advantage by ignoring its biofuel component obligation.

Terminal Oil board member Raido Raudsepp told ERR in June that Olerex has been failing to meet its obligation for years and has caused other market participants damages of at least €100 million. "I would even go so far as to describe it as the largest case of fraud on the Estonian fuel market," Raudsepp said.

Olerex told ERR that the accusations were misleading.

Olerex to appeal the decision

But the fuel retailer said it plans to appeal the Environment Agency's decision.

"Olerex has always based its activities on current legal acts, including in this case," CEO Piret Miller said. "Today's decision is wrongful at heart because Olerex neither sought nor received financial gain at the expense of the natural environment and never wished to break the law."

The company said in a press release that in order to meet its biofuel quota, it bought fuel that had ISCC certificates from international corporation Trafigura.

"The investigative organ finds that the transaction was not legal. /.../ There were no financial gains for Olerex after the company made considerable expenses to buy the fuel and secure the necessary certificates. Olerex's activity was aimed at meetings its obligation and provided the firm with no benefits," the document reads.

"With legal and procedural questions in mind, Olerex has decided to appeal the decision and hopes the court will provide legal clarity in the matter."

All fuel retailers must make sure 7.5 percent of motor fuels they sell are from sustainable sources and emit less greenhouse gases. Companies have several ways in which to meet the obligation, including by offering biogas, solar or wind energy or HVO diesel fuel.

Hydrotreated Vegetable Oil (HVO) is a diesel-like fuel that can be produced without fossil resources by processing renewable waste lipids. HVO diesel is safe to use in all modern diesel engines and can reduce carbon emissions by up to 90 percent compared to fossil diesel.

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Editor: Marko Tooming, Marcus Turovski

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