Gasoline prices in Russia has been asked to tame

184

www.vsyako.netPhoto: Dmitry Lebedev / Kommersant

The owners of an independent (from major oil companies) gas stations (gas station) asked the government to tame gasoline prices on the Russian domestic market, abolishing regulatory mechanism using damping allowances and liberalitas pricing. This is stated in letters which Independent fuel Union (NTS) is sent to the head of the Federal Antimonopoly service (FAS) Igor Artemyev and Minister of energy Alexander Novak. Excerpts from the document leads owned by Grigory Berezkin RBC.

Gas station owners pay attention of officials to the fact that in may in many regions of Russia there was an increase in the price of gasoline and diesel fuel. They associate the situation with current regulations state regulation of the industry and asking them to change.

Authors are encouraged to take three steps: to restore the previous, higher rates for the sale of gasoline to the domestic market, which will increase the offer and reduce the price; to cancel the ban on the purchase of the cheaper fuel abroad, introduced in may, and the abolition of the compensation mechanism of the effects of the tax maneuver by a new reverse excise with dampening allowance.

The latter was introduced in 2018 after Russia began the final phase of the tax maneuver. He suggests gradual — until 2024 — the abolition of export duties on oil and oil products with a simultaneous increase in the tax on mineral extraction (met). So the government expects to increase the collection of oil revenues, since the severance tax is levied on all produced in the country of oil, not just exported.

Tax reform has a negative impact on the profitability of oil refineries (refinery) — both independent and part of large vertically integrated oil companies (VINK). The export tax is used in order to reduce the price of oil and oil products, particularly gasoline, in the domestic market.

The sellers are guided by the so-called netback — cost of goods on the world market minus transportation costs and export duties. This index indicates how much the company can earn in the sale of oil or product from it abroad. If netback higher than current prices in the domestic market, companies prefer to export the extracted, if lower — sell in their own country. The higher export duty, the lower the netback, and therefore the price at which oil companies are willing to sell products in Russia. With the elimination of the export duty the price is automatically increased.

To offset this negative effect and to prevent a sharp growth of prices for gasoline and diesel fuel, the government imposed excise tax on new goods — oil raw materials, are sent for sale in the domestic market. The excise tax is back, and its value is deducted from the total amount of taxes payable by certain vertically integrated companies. But a more significant role in the damping mechanism plays a Supplement to reverse excise duty.

In 2020 it is equal to 75 percent of the difference between the netback and pre-established by the government of the conditional prices on the domestic market. When netback above, the damper is positive (tax deduction increases), when lower netback conventional domestic prices, the damper becomes negative (a tax deduction decreases and the company, in fact, forced to pay more into the budget because of the failure for themselves the world market).

The damper is reset to zero when the real current price of oil in the domestic market than conditional greater than 10 percent. This puts oil companies in a dilemma: to keep prices above 10 per cent, so as not to activate the damper, or to pay it into the Treasury, and then to raise prices in the domestic market for its value. Both options lead to higher domestic prices of gasoline and diesel fuel.

For the independent refinery has developed a separate mechanism of compensation of losses from the tax maneuver based on their distance from export routes and readiness for technological modernization.

The mechanism with the use of the damper has repeatedly been criticized by market participants. They asked to cancel it or exclude the possibility of calculating a negative value. However, the government still has not went to such changes, limiting the gradual increase of the coefficient multiplied by the difference between the netback and conditional domestic price. In 2019 he was 60 percent, now 75.

The benefit of the state from maintaining the current rules is that a negative damper (which companies pay to the budget and compensate for higher domestic prices) diminishes the budget losses from low world oil prices: the size of the export duty and mineral extraction tax is directly dependent on it.

In the present letter, the owners of independent gas stations once again point to the need for change. In their opinion, the best solution would be a complete lifting of the damper for at least the duration of the restrictions due to pandemic coronavirus.

However, some of the interviewed economists believe that such a step may instead lead to even higher prices for gasoline and diesel fuel in Russia. Their position, they did not explicitly justify.

Video, photo All from Russia.

LEAVE A REPLY

Please enter your comment!
Please enter your name here