Shell Bulgaria AD, a unit of Royal Dutch/Shell, posted little or no net profit last year due to the declining purchasing power of the population, an executive said yesterday.

"We expect profit of around zero for last year, according to our preliminary data," said Katya Atanasova, head of sales at Shell Bulgaria, in an interview. "Fuel volumes sold last year had fallen by some 15 per cent due to declining fuel consumption."

The unit had a loss of eight million levs ($3.8 million) in 1999.The purchasing power of Bulgarians is one-third that of the average European, and has been hit by rising fuel prices and a drop in the lev against the dollar, she said.

The lev, which has been pegged to the euro under a currency board system since 1999, lost about 20 per cent of its value against the dollar last year.

Shell Bulgaria has invested more than $80 million in Bulgaria since its entry into the market in 1991, and has 70 filling stations, said Atanasova. The company has put its share of the domestic market at 20 per cent.

It suspended investment in 1999 and resumed it in 2000 as Bulgaria's economy showed signs of recovery from the Kosovo crisis. The company plans to open five or six new filling stations in 2001, Atanasova said.

Shell Bulgaria's major competitor is local fuel retailer Petrol, which has 427 petrol stations and estimates its market share at around 28 per cent. Russia's oil major Lukoil's subsidiary Lukoil Petrol Bulgaria, which bought a 58 per cent stake in the country's major oil refinery Neftochim, said it had opened 11 filling stations and plans to expand to 40 by year-end.

Austria's OMV's subsidiary OMV Bulgaria has 35 filling stations, and plans 80 by 2005.