Russia to adjust damper on fuel market on companies’ request

MOSCOW, Mar 10 (PRIME) -- The Russian government will adjust the damper mechanism of the fuel market by raising prices in line with the growth of retail prices on request of oil companies, the government said in a statement on Wednesday following a meeting with the representatives of oil companies.

Russia introduced a damper mechanism in the oil industry to compensate losses of oil companies from local fuel sales when export prices for gasoline and diesel fuel are higher than indicative local prices. But oil companies have to give the government some of the excessive profits from the local fuel sales if local prices are higher than abroad.

The government raises indicative prices by 5% per year until 2024, but oil companies repeatedly said that the mechanism does not take into account the real market situation, and that the indexation outperforms inflation.

“After discussion the meeting’s participants decided to adjust the internal market price, the basis for the existing damping mechanism, by the actual growth dynamics in 2019–2020, and to use the actual growth dynamics of retail prices for future calculations of the damper,” the government said.

The decision should improve the economy of the oil refining sector and ensure that the retail prices don’t grow faster than annual inflation.

Deputy Finance Minister Alexei Sazanov told reporters that the ministry planned to start drafting parameters of the excess profits tax on highly viscous oil and on super-viscous oil in September–November.

“This process has not started yet. We agreed to prepare the parameters until the end of the year, and they should come in force from 2024. I think that we will start doing that in the autumn,” he said.

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