Russia's MinFin proposes to extend damper adjustment for gasoline to 2029 to save 916 bln rubles for budget

MOSCOW. Sept 26 (Interfax) - Russia's Finance Ministry is proposing to extend to 2027 and 2028 the special coefficient (VSPR) that made it possible to reduce government payments to oil companies on the fuel damper subsidy as part of tax changes for the draft budget for the next three years.

The extension of this mechanism is expected to generate 422.805 billion rubles of additional budget revenue in 2027 and 493.052 billion rubles in 2028, a source familiar with materials for the draft federal budget told Interfax.

The VSPR is the allowance for the Urals crude price discount against Brent built into the formula of the damper. The mechanism of the price differential in the calculation of payments to oil companies was approved by the State Duma in July 2022 (bill No. 136059-8) and went into effect on September 1, 2022. The adjustment brought the indicative export price for gasoline in the damper formula closer to the actual price of Russian gasoline in Europe, meaning the average Urals discount against Brent in a month began to be subtracted from the average price of gasoline in Europe.

Deputy Finance Minister Alexei Sazanov said during debates on the bill in parliament that his ministry estimated this adjustment would make it possible to reduce budget spending on payments to oil companies by about 100 billion rubles in 2022.

Subsequently, in 2023 and 2025, the parameters of the VSPR were refined, but the mechanism for adjusting the damper was expected to be eliminated in 2027.

The amendments prepared by the Finance Ministry also call for setting nominal values for average wholesale motor fuel prices that will be used for calculating the dampening components of the excise on crude oil shipped for refining, which will give the budget an additional 116 billion rubles in 2028.