Finance Ministry agrees to raise fuel damper price deviation by 10 pp, govt to decide start date

MOSCOW. Sept 15 (Interfax) - The Finance Ministry has agreed to raise the acceptable deviation of actual wholesale fuel prices from those set by the Tax Code in the fuel damper formula by 10 percentage points (pp) in one sitting, up to 20% for petrol and 30% for diesel fuel, while the government will decide when the adjustments are to come into effect, Deputy Finance Minister of Russia Alexei Sazanov told journalists.

The government has previously discussed raising the deviation indicator by 5 pp retroactively, from August 1. This would allow oil companies to claim payments from the budget under the fuel damper, which experts estimate could amount to 32 billion rubles. The exchange price for gasoline in August will only be at the necessary level for oil companies to receive payouts if the indicator is raised by 5 pp to 15%. It stands at 10% according to current legislation.

In the middle of August, Russian Prime Minister Alexander Novak gave the Finance Ministry and Energy Ministry until September 10 to apply provisions to increase the acceptable deviation retroactively, from August 1.

Interfax sources reported that the Finance Ministry did not complete the draft bill by September 10 and proposed waiving damper payments for August. Another source said that the issue would be solved in the process of developing the draft budget for the next three-year period, currently nearing completion, and in conjunction with its final specifications.

Sazanov said on Monday that this related to lost revenue and that therefore "the issue will be discussed by the government". "We agree that, considering the situation on the market, the range can be increased straight away by 20% for gasoline and 30% for diesel fuel. At the same time, whether we apply these changes retroactively or not should be decided based on the budget situation. As such, this decision will be made by leadership," he said.

Sazanov said that the Tax Code would be adjusted to expand the acceptable deviation range in autumn. "Taking into account the market situation, we can agree straight away that the range can be changed to 20% for gasoline and 30% for diesel fuel, but leadership will decide the date on which those changes will enter into force. In any case, they will definitely have been implemented by autumn," he said.