10 Nov 2023 14:53

Russian oil companies to pay increased MET estimated around 200 bln rubles in January owing to return of damper

MOSCOW. Nov 10 (Interfax) - The Russian government has introduced amendments to the bill on returning the damper payment for fuel to the same amount as of October, according to the materials posted on the State Duma website.

The government introduced the amendments to the bill ahead of the second reading, and the State Duma adopted them in the second reading as a whole on Thursday.

According to the text of the amendments, the mineral extraction tax (MET) on oil, which automatically increases because of a rise in damper payments, will not increase in October-December, though the underpaid MET tax must go to the Russian budget in January 2024.

"As part of drafting the amendments to double the damper payments of refineries as of October 1, 2023, it was decided to postpone the payment of the increased MET to January 2024, which also automatically rises when the damper formula changes. This is because payments under the damper in favor of companies are possible ex post according to tax legislation, while additional accrual of MET is not permitted ex post. Accordingly, payment of the increased MET has been postponed to January 2024," the Finance Ministry confirmed to Interfax.

According to Petromarket, additional federal budget expenses should total around 330 billion rubles in October-December 2023 owing to the damper adjustment that began functioning in October.

When discussing the decision to return the full damper, which was halved in September, but is returning in October, the Finance Ministry insisted that the funds be compensated to the budget. During hearings on the bill, State Secretary and Deputy Finance Minister Alexei Sazanov said that compensation for budgetary expenses for the payments would occur owing to the automatic increase in the MET on oil included in the formula; growth in the MET on condensate for Gazprom ; as well as a reduction in payments for the reverse excise duty for oil refineries that do not fulfill their obligations to supply petroleum products to the domestic market.

The Finance Ministry has not specified the increased volume of the MET on oil that will be paid in January 2024.

According to Sinara Investment Company's Kirill Bakhtin, the MET on oil for all companies will increase overall by 190 billion rubles in October-December, when the damper returns to the previous parameters. Specifically, oil companies will have to pay 190 billion rubles more in January. Bakhtin noted that monthly oil and gas revenues to the budget are estimated at 900 billion rubles, thus the change in the MET formula could be moderately positive for the ruble in January 2024.