1 Apr 2019 11:30

Russia might offset increased compensation for oil cos with National Welfare Fund - paper

MOSCOW. April 1 (Interfax) - The Russian budget revenues lost as a result of the reduction of indicative prices for gasoline and diesel fuel in the dampening mechanism for oil companies might be offset with funds from the National Welfare Fund (NWF), business daily Vedomosti reported on Monday.

This was proposed at a meeting with Prime Minister Dmitry Medvedev on March 21, the paper's sources said, citing the minutes of the meeting. This option was also discussed at a meeting with Deputy Prime Minister Dmitry Kozak on March 26, though this meeting was not attended by representatives of the Finance Ministry, the paper said.

The Finance Ministry is insisting that the budget be fully compensated for the 120 billion-190 billion rubles in revenue that will be lost as a result of the revision of the dampening mechanism, the ministry's director of tax and customs policy, Alexei Sazanov said earlier in an interview with Interfax.

It was reported earlier that another option for offsetting the lost revenue could be a mineral extraction tax hike, though the Energy Ministry opposes this approach. Energy Minister Alexander Novak said that another option could be partial compensation with an increase in duties on middle distillates.

Kozak told reporters at the end of last week that the lost revenue will be partially offset by an additional excise on gasoil.

"[The source of compensation for lost revenues] is the subject of discussion. There is one source that has already been determined, the imposition of an additional excise on gasoil. But this is only part of the problem. As for other sources, that is the subject of discussion in the government," Kozak said. Asked if the lost revenue might be offset by raising the mineral extraction tax, he said "probably not."

Vedomosti reported a source close to the Finance Ministry as saying that the rules for using money in the NWF are spelled out by law and they do not allow for the fund to be used to offset lost revenue.