Sechin criticized the tax policy of the Ministry of Finance

The head of Rosneft also complained about the strict monetary policy and the passivity of the Central Bank in ensuring payments

Moscow. November 30th. INTERFAX.RU – The crisis in the Russian fuel market, which forced the government to resort to a temporary ban on the export of petroleum products, was caused by incorrect steps in tax policy, says Rosneft head Igor Sechin.

“The constant change in the industry taxation system has a great influence on the company’s activities,” Sechin is quoted as saying in press release “Rosneft”, dedicated to the company’s results for January-September.

“An undeveloped decision to reduce the damper provoked a crisis in the domestic fuel market in August-September of this year,” noted the head of Rosneft, referring to the halving of the fuel damper from September, which was returned to the same amount in October.

“And already in October, the Russian Ministry of Finance initiated further changes to one of the basic parameters of taxation in the oil industry – the procedure for determining the price of oil for tax purposes. In particular, an economically unjustified reduction in the forecast differentials of the price of Russian oil to the price of Brent oil was provided. “In this case, by continuing to use a price indicator (Brent quote) that is irrelevant for Russia for taxation, the financial department ignores fundamental changes in the operating conditions of the country’s oil industry: the formation of new directions for the supply of Russian oil and approaches to its pricing,” Sechin said.

Also, according to him, for tax purposes it is proposed to use “virtual freight costs for no longer existing routes for the supply of Russian oil to Europe, without taking into account the cost of transport and other logistics costs, insurance costs, conversion costs, interest payments on borrowed loans.”

“Another initiative, implemented without a comprehensive analysis of its impact and without discussion with the industry, is the differentiation of gas prices for various categories of industrial consumers against the backdrop of an increase in the tax burden on the industry. The adopted changes will lead to an imbalance in the market and the creation of gas shortages for socially significant industries In addition, an increase in the mineral extraction tax on gas (the volume of payments in the next three years will increase by 25%) will lead to the withdrawal of investment and working resources from the industry and will reduce the ability to maintain production levels in the future. All this significantly complicates long-term planning of investments and the further implementation of already started projects,” Rosneft quotes its head as saying.

Sechin also announced the negative impact on the financial results of Rosneft of the tightening of the monetary policy of the Bank of Russia.

“Since July, there has been a progressive increase in the key rate, which has a negative impact on the cost of financing, both for the company and its contractors and suppliers, which, in turn, leads to an increase in the cost and timing of projects, and also affects the profit that is the basis to determine the amount of dividends. This had an impact on the financial indicators of the reporting period – for 9 months of 2023, interest expenses increased by 15% – and the delayed effect of the decisions of the Central Bank of the Russian Federation on the key rate will increase it in the coming periods,” he noted.

Finally, according to Sechin, against the backdrop of constantly growing sanctions pressure and the introduction of ever new restrictions that negatively affect the activities of Rosneft, the Bank of Russia “has not yet created reliable routes for the execution of cross-border payments in various currencies, which makes it difficult to timely credit export proceeds.”

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