Russia to change distribution of transport subsidy for exporters in 2025, link it to scale of future exports
MOSCOW. July 19 (Interfax) - Russia's Industry and Trade Ministry will change the rules for distributing subsidies to cover a portion of the transport costs incurred by exporters of manufactured goods next year, replacing a compensation model with an incentive one linked to the scale of planned exports.
"Given the reorientation of export shipments to new markets, starting in 2025 there are plans to transition to an incentive model of providing subsidies for the transportation of manufactured products for exporters in all areas of industry, which calls for selecting recipients of subsidies based on their export plans in the future period. Subsidy recipients in the incentive model are determined according to the results of competitive selection and ranked based on the greatest budget efficiency - larger amount of exports per 1 ruble of budget funding," the ministry's press service told Interfax.
The transport subsidy is one of the most popular support measures among Russian exporters of manufactured goods and is currently regulated by resolution No. 1347, which is in effect from 2022 to the end of 2024 instead of resolution 496 and calls for subsidizing transportation of engineering, forestry and pharmaceutical products. The temporary rules for distributing the subsidy instituted amid sanctions forego competitive procedures and introduce a compensation model where exporters can claim the subsidy after exporting goods.
The mechanism for selecting applications for the subsidy, where the limit set in the budget is distributed on a first-come first-served basis has drawn repeated criticism from recipients. Forestry industry representatives, for example, said at a meeting of the Federation Council's council for the development of Russia's forestry sector last week that the limit was used up two minutes after applications began to be accepted and many companies were unable to access this support measure for purely technical reasons.
Deputy Industry and Trade Minister Oleg Bocharov said at the meeting that a new procedure for distributing the subsidies is supposed to be approved this fall. "Starting in the third quarter we are transitioning to an advance declaration format, meaning this headlong race of whoever presses the button first gets the export transport subsidy will end," he said.
"The selection of recipients under the changed model will be carried out after the approval of the corresponding decision on the procedure for granting the subsidy, which organizations will be informed about by a wide range of information sources - official websites, Telegram channels, the unified portal of the budget system, as well as through JSC Russian Export Center [the government's agent in the distribution of the export subsidy]," the ministry press service said.
In 2024, the transport subsidy will continue to be handed out under the compensation model, the ministry said. "Therefore, requests will be granted according to the current rules taking into account the procedure for receiving them," it said.
The federal budget allocates 17.7 billion rubles for the logistics export subsidy in 2024, of which 40% must go to exporters of engineering products under resolution No. 1347, 30% to pharmaceutical exporters and 30% to forest product exporters.
A final decision on how the subsidy will be distributed by sector in 2025 and beyond has not been made yet.
"Financing for the measure will be determined according to the results of the extension of the International Cooperation and Exports national project. Tentatively there are plans to keep the 30% allocation for forestry sector organizations," the ministry said.
Forestry industry representatives intend to ask the government to maintain the 30% subsidy allocation for their industry in 2025, a source familiar with a decision made at the council meeting told Interfax.
The vice president for government relations, forest policy and sustainable development at forestry group Segezha , Nikolai Ivanov said the industry is counting on the government increasing, not just maintaining, the funding for the subsidy, which decreased considerably this year.
"It makes sense to return to linking the amount of provided subsidies to criteria of efficacy, and at least restore the amount of financing to a level no less than 2023," Segezha's press service quoted Ivanov as saying. The government allocated 25.5 billion rubles for the transport subsidy in 2023, meaning 7.6 billion rubles went to forest product exporters, whereas this year they will get 5.3 billion rubles.