27 Apr 2023 14:14

MinFin expecting decisions from gov't on adjustment of fuel damper shortly

MOSCOW. April 27 (Interfax) - The Finance Ministry is waiting for the government to make a decision on adjustments to the damping mechanism on oil products in the very near future, Deputy Finance Minister Alexei Sazanov told reporters.

"The issue is being worked on in the government. There are various proposals, the final decision on whether changes will be supported or not is with the government," he said. "Either right after the May holidays or in the coming week," Sazanov said when asked when a final decision could be expected. "It depends on the work schedule of the government," he said.

Sazanov did not comment on the reduction of discounts on Russian oil, saying that it is premature to give an estimate, and that there is a need to "monitor the situation going forward".

Earlier, Russian Deputy Prime Minister Alexander Novak said that the government was discussing changing the parameters of the fuel dumper, but did not elaborate on the essence of the adjustment.

On Tuesday, the Bloomberg news agency, citing two sources familiar with the discussions, reported that the Russian government is considering increasing the base price of gasoline and diesel fuel in the calculation of the fuel damping mechanism by 50%, which could lead to a reduction in payments to oil producers from the budget or to what producers pay into the budget.

In mid-April, Finance Minister Anton Siluanov said: "We have a number of other considerations regarding adjustment of the mechanism for taxation of oil companies. We are discussing it in the government and, accordingly, with oil producers."

The damper mechanism for petroleum products has been in effect in Russia since 2019. It is calculated based on the difference between the export cost of fuel and the indicative domestic price (designated by law). If this difference is positive and exports become more profitable than supplies to the domestic market, the state pays the oil companies; if the difference is negative, oil companies pay into the budget.

Payments from the Russian budget to oil companies under the fuel damper mechanism in March 2023 amounted to 96.7 billion rubles, while in March 2022 they totaled 152.8 billion rubles.

In January-March 2023 such payments amounted to 253.3 billion rubles compared with 351.6 billion rubles in the corresponding period of the previous year.

As of April 1, the adjusted gasoline and diesel fuel damper came into effect - the price differential used to calculate the gasoline dampener was increased from $20 to $25 per barrel, and a price differential was introduced when calculating the diesel fuel damper with a cap of $10 per barrel.