14:21 GMT +325 November 2017
Live
    Russia

    Russia boosts gasoline export duty to keep fuel at home

    Russia
    Get short URL
    0 11 0 0

    Russia, the world's largest oil producer, will hike its gasoline export duty 44 percent from May 1 instead of an expected 34 percent to fight local fuel shortages, the government said in a regulation on Friday.

    Russia, the world's largest oil producer, will hike its gasoline export duty 44 percent from May 1 instead of an expected 34 percent to fight local fuel shortages, the government said in a regulation on Friday.

    The tariff, tied to international prices for gasoline, will stand at $408.3 per ton instead of the previously planned $304 per ton, it said.

    "Gasoline exports will now make sense only for companies with refineries near the border," said Vadim Mitroshin, an analyst at Otkritie bank.

    International oil and oil product prices have been boosted by unrest in the energy-rich Middle East and local companies prefer to sell gasoline on the world market after the Russian government capped retail prices. The price regulations led to a deficit of gasoline in many Siberian regions and in the north of the country.

    "The rather kneejerk emergency measure to raise export duties ... comes in response to shortages on the domestic market. The shortages, in turn, were provoked by the government's insistence in February that oil companies freeze prices at the pump, which incentivized them to export more of their gasoline," Troika Dialog investment bank said in a research note.

    Russian companies sent just about 8 percent of total gasoline production abroad in 2010, so the direct effect will be small, but higher export duties should depress domestic prices, Troika said.

    Gasoline price rises were reported across the country at between 2 and 20 percent this week and Deputy Energy Minister Sergei Kudryashov has said he expected a further 5 percent rise.

    Troika also questioned whether the government could cap domestic gasoline prices effectively, as, unlike diesel, they are not necessarily an efficient tool to limit exports.

    "In any case, the state has no one but itself to blame for the fiasco - it coupled a doubling of the excise tax in January with arbitrary demand for gasoline price cuts in February, and then was shocked, shocked to learn that shortages have sprouted," Troika said. "The havoc at the pumps in some regions shows that the current taxation system, heavily reliant on export duties and other revenue based sources, is a spectacular failure."

    In a sign that problems with gasoline persist, a filling station chain in Krasnoyarsk in Siberia stopped selling one type of gasoline for cash.

    "We have decided to insure against the difficult situation. We have agreements with a number of clients who have already paid for their gasoline, and we are doing everything so they could continue using our services," a company official told RIA Novosti.

    VTB analyst Lev Snykov agreed that the government was to blame, and keeping a tight lid on gasoline prices had led to falling refining volumes.

    "The current initiative is designed to bring export prices and domestic prices in sync. However, the measure only aggravates the discrepancy between the profitability of crude oil exports and refining operations," he said.

    "Therefore, unless the companies are forced to run their refining operations at full capacity, even if at a loss to themselves, the deficit might well persist, maybe in a less acute form."

    MOSCOW, April 29 (RIA Novosti) 

    Community standardsDiscussion
    Comment via FacebookComment via Sputnik
    • Сomment