The proposal establishes a unified duty on heavy and light petroleum products at the level of 45 percent of the rate for oil.
Photo: Viktor Polyakov
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Gov’t Evens out Petro Product Duties
A government commission on protective measures in international trade led by First Deputy Prime Minister Viktor Zubkov intends to approve a proposal made by the Ministry of Energy and conciliated among state agencies on the establishment of a unified duty on heavy and light petroleum products at the level of 54 percent of the rate for oil. The purpose of the measure is to encourage deeper refining of oil and modernization of oil refineries in Russia. This is part of the ministry’s second tax package to stimulate the petroleum industry.
As of October 1, the duty on crude oil exports was $372.20 per ton. On light petroleum products, the duty was $263.1 (63.4 percent of the oil duty) and on heavy petroleum products, it was $141.70 (38 percent of the oil duty). The new rate is not expected to affect budget income or oil companies’ income. The only negative effects from the changes will be felt by companies specializing in the export of fuel oil. Their tax burden will rise.
The measure’s effectiveness in encouraging refining may be negatively affected by the falling consumption rates brought on by the world financial crisis. “An industry source told Kommersant that “The evening of the duties is really aimed against mini-refineries whose activities are uncontrolled that are technologically unable to produce high-quality gasoline and churn out fuel oil for export and further refinement.” The source said that there are hundreds of such refineries. The volume they produce is also hard to estimate because they use a certain amount of stolen oil. Mainly the refineries are located in the south of Russia and have close ties with local administrations. Up to 30 percent of the gasoline on the market is counterfeit as well, the source said.
www.kommersant.com
All the Article in Russian as of Oct. 13, 2008
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