The Ministry of Finance expects indexation of the conditional price of fuel in the damper on July 1

by time news

The Russian Ministry of Finance expects that the bill on adjusting the fuel damper will be adopted in the spring if the government approves joint proposals with the Ministry of Energy, State Secretary – Deputy Finance Minister Alexei Sazanov told TASS.

The planned date for indexing the conditional fuel price is July 1, now the department is discussing the parameters of the amendments with the Ministry of Energy.

Sazanov also said that there will be no retroactive adjustment of the fuel damper, because this is fraught with falling budget revenues, Interfax reports.

“Our main goal is these systemic solutions, which in the long term will ensure consumer protection to a greater extent. That is, it will prevent the possibility of any rise in prices above inflation. Now, in terms of the level of compensation (dropping income. – IF), it will most likely be 50/50. 50% through the MET, 50% through the NWF,” Sazanov said.

On December 29, Deputy Prime Minister Alexander Novak announced that the government had developed proposals for adjusting the damping mechanism: in 2022, the indicative price in the damper formula will be indexed by 3%. The government will also increase the level of compensation from 68% to 83% of the difference between the export price and the indicative price of gasoline.

The damping mechanism in the oil industry was introduced in Russia in 2019 to contain prices in the domestic fuel market. It involves a reverse excise tax for fuel producers. If gasoline and diesel fuel are more expensive abroad than on the domestic market, then the state compensates refineries for part of this difference in order to encourage them not to raise prices in Russia. Otherwise, oil companies transfer part of their excess profits to the budget. Thanks to his work, gasoline prices at filling stations in 2019 grew at a rate comparable to inflation, and in 2020 they increased by 2.5%, which is almost twice as low as inflation.

The Russian Fuel Union previously warned the government that if this mechanism is not corrected, then many gas stations may go bankrupt. The head of Gazprom Neft, Alexander Dyukov, said that the mechanism needs to be “adjusted” so that fuel sales at filling stations become profitable and investments in this business begin.

At the end of last year, the Federal Antimonopoly Service (FAS) proposed fixing the current parameters of the damper mechanism for the domestic fuel market for 2022. The head of the department, Maxim Shaskolsky, said that the FAS had developed a proposal to increase fuel sales on the stock exchange (including gasoline by up to 15%). “There is a proposal to fix the level of the indicative damper price that currently exists and not change it for the next year. Deviations from this price should be reduced to 10%,” Shaskolsky said (quoted by TASS).

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