17 Nov 2023 11:36

Russian State Duma passes law to raise MET on gas as part of wholesale price indexation

MOSCOW. Nov 17 (Interfax) - The Russian State Duma, in the third reading, has passed the bill that increases the mineral extraction tax (MET) on gas in order to withdraw for the federal budget additional income generated from taxpayers from advanced indexation of wholesale prices, according to the voting results.

According to the socio-economic development forecast for 2024-2026, there are plans as of December 1, 2023, to increase wholesale gas prices for industrial consumers by 10%, except for the electric power industry, heat supply companies, and housing and communal services organizations. Moreover, wholesale prices for all categories of consumers will be indexed by 11.2% as of July 1, 2024, and by 8.2% in 2025.

According to the passed law, MET as of January 2024 increases by the so-called "bump" in the amount of additional revenue from the indexation of wholesale prices by 10% for a number of consumers, calculated from the volume of gas sales at wholesale regulated prices, except for households, electric power enterprises, as well as organizations processing associated petroleum gas and reselling purchased gas.

Meantime, Gazprom will not be affected by the withdrawal of revenue from tariff indexation in 2024 and 2025. MET for other producers will increase as of August 2024 by the amount of revenue received from the indexation of gas tariffs for all categories of consumers.

The basic tax rate will not change in 2024 upon the request of companies.

"In terms of the Cv [the conditional gas price that also changes when indexed in the MET calculation], we have already stipulated that the Cv will not be indexed as of January 1, 2024, when calculating the gas tax rate. These were precisely the comments from the gas companies; that they had a double withdrawal through both the additional MET and through the increase in the baseline tax rate. Accordingly, we are not indexing the Cv ratio as of January 1, 2024, and it will be indexed by a separate deflator ratio, as established by the government, starting from 2024," State Secretary and Deputy Finance Minister Alexei Sazanov explained.