Medvedev instructs govt to study ways of reducing taxes for major upstream Gazprom projects with foreign investors
GORKI. Oct 30 (Interfax) - Russian Prime Minister Dmitry Medvedev has ordered the government to study ways in which the debt burden could be reduced for major joint power projects between Russian and foreign investors.
"We are estimating how we can reduce the debt burden for joint projects of our power companies and foreign investors. As a rule, these are major projects which require huge investment, but in order to develop the economy and country as a whole, it's important to develop new fields, create new jobs and therefore we need to find a balance here," Medvedev said at a meeting with deputy prime ministers on Monday.
A list of instructions published on the government's website following the 31st meeting of the Foreign Investment Advisory Council (FIAC) contained the following statement: "The Finance Ministry, Energy Ministry and Economic Development Ministry, together with interested federal government executive bodies, are to study the issue of reducing the debt burden for Gazprom's projects with high-profile foreign investors by lowering mineral extraction taxes."
The statement did not specify when the government was to give its report and contained only the phrase: "report results to the Russian government."
As reported earlier, the mineral extraction tax (MET) has doubled since 2012 for Gazprom and companies in which Gazprom holds more than a 50% stake. By contrast, independent producers have seen gas taxes rise only in line with inflation through changes to the marked-down ratio. Gazprom holds a 30% stake in the company Severneftegazprom, a joint venture between Gazprom, BASF and Uniper, but also owns 51% of voting shares. Russia's Finance Ministry said that the joint venture was under the control of Gazprom and therefore the company was forced to pay MET at the maximum rate.
Gazrom made attempts to turn the company's joint venture with Rosneft - Purgaz - into an independent producer by transferring a symbolic stake to Gazprombank . This was however rejected by Russian tax authorities who refused to recognize Purgaz as an independent producer and continued to apply MET for the company at the maximum rate. After numerous lawsuits for not paying taxes and a criminal case lodged against the company's general director, the company ended up fully returning all unpaid taxes to the budget.