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Automatically translated version. May contain inaccuracies compared to the original.
Caution at gas stations!
The tax authority’s ignoring of excise schemes around bioethanol — turning it into a virtual excise-free solvent — is already converting into major problems for the fuel market.
And the ignoring continues.
And now the issue is not only the five billion hryvnias of excise stolen in a year.
The point is that this virtual solvent, in fact just bioethanol stripped of excise, has become the main component in the production of counterfeit fuel, volumes of which already reach 10–15% of the entire fuel market.
And they continue to grow.
Serhiy Kuyun highlighted the escalating catastrophe.
He analyzed that the fuel market in Ukraine is starting to fill up with adulterated product, and demand for its components — along with their prices — is rising at a furious pace.
Here’s a key excerpt from his post:
The price of gas condensate, from which mini-refineries make base gasoline, has reached 70 000 UAH/ton. Last year there was nowhere to put it; it cost 15–20 thousand UAH, and it even had to be exported.
To make primitive gasoline burn you need an octane-boosting component. In our case these are solvents produced by Ukrainian distilleries. Solvents today cost as much as ready-quality gasoline — 85 000 UAH/ton. (The only alternative to selling domestically — export — would bring 40 000 UAH/ton).
The cost of gasoline produced in this way today is 55 UAH/l. At the pumps it averages 80 UAH/l. As you can see, the profit is not bad. And do you know why?
Because this fuel has no excise. Which is about 15 UAH/l.
And why is there no excise?
Because the state allows distilleries to issue excise-liable bioethanol and call it on paper an excise-free “solvent.”
If a product is subject to excise, it moves through the chain under separate tax control, and if it does not reach its final purpose in the form of producing excise-liable fuel, there is economically no sense in buying it.
But when a product is excise-free, it is under general oversight, and this product, through one or two intermediaries, “disappears” from the tax authorities’ sight. In fact it ends up mixed with the same excise-free gasoline made from excise-free gas condensate.
For many years a bill has been floating in parliament to make condensate excise-liable, with a rate of 0, but that would allow its path to be tracked.
But it is being successfully blocked by private oil extraction companies, because the adulterators buy it for 70 000 UAH, and without them it would be 20 000 UAH.
The same situation exists with the distillers. Today they sell solvent for 85 000 UAH, and if there were no demand from the adulterators, they would sell for export at 40 000 UAH.
I understand that that super-profit of 40–45 thousand UAH per ton is distributed among the interested “protectors.”
Estimated volumes of solvent production allow us to estimate the amount of gasoline produced with their help at 250–300 thousand tons, or 10–15% of the market.
In excise terms, these are state losses of at least 5 billion UAH per year.
Effectively this is corrupt cash that eats away at the state apparatus from the inside and breeds new schemes.
I will add to this post only the statistics that Acting Head of the State Tax Service Lesia Karnaukh voiced at the gathering of bioethanol producers last month.
“There are currently 10 companies and 6 producers operating in the bioethanol market.
Over the past year they produced 109 million liters of bioethanol, of which 97 million went to export.
The official figure for domestic consumption is only 3%.
For the period January–May 2026, the bioethanol sector paid only 41,7 million UAH in taxes, of which VAT was 3,3 million UAH.”
Now answer the question for yourself.
If the price of “washed of excise” bioethanol for the adulteration market is 85 thousand UAH per ton, which is twice the export price, does it make business sense to ship it out of Ukraine?
Of course not.
Especially when excise-liable bioethanol is virtually transformed into an excise-free solvent on paper, which then simply disappears in paperwork at individual entrepreneurs.
And de facto it goes for cash into the production of surrogate fuel, whose volume only grows.
Therefore the real share of bioethanol that goes to the domestic market is not 3%, but 30–35%.
A billion-scale market in the shadows.
Yet the budget does not see its taxes.
Nor does the tax authority itself see the scheme.
