Tax policy in the sphere of gas production decline threatens the industry - experts

March 2, Parliament adopted the Law of Ukraine №2213 «On Amendments to Articles 165 and 252 of the Tax Code of Ukraine", which amends the scope of natural gas public companies. The law establishes the rent increase from 20% to 70% for gas producing companies in which the state owns 50% + 1 share. Private companies are also not in a better position.

 

3 - 5 March in Kiev held the second annual conference of the Adam Smith Institute "Ukrainian Energy Forum" and the theme of rent was a red line in the reports and discussions of participants. Members extractive industry report that rental rates are too high, therefore most companies will be forced to cut planned investment programs.

 

"If the rent is higher than 30%, we will have to minimize the investment program of at least 80%. And maybe higher, "- said in his speech, Chief Geologist Burisma Holdings Bogdan Krupskyi.

 

Recall increase rent payments in July 2014 with the expectation taken more revenue in the amount of 4.3 billion USD. But in July 2014 mining companies promised such temporary measures - up to 1 January 2015, which caused the loyalty of the companies to additional fiscal burden. 2015 rates for private gas producing companies were at the same level. On March 2nd level of rent payments for the state of PJSC "Ukrgasdobycha" increased from 20% to 70%. When gas wells with newly introduced (after 1 August 2014) and registered in the State Register for two years will apply downward factor in the amount of 0.55%. In this case, the rate will be 38% instead of 70%.

 

"Such steps lead Ukraine in the opposite direction of energy independence and the country should be prepared for reduction of domestic energy resources, leaving investors with fast gas sector in Ukraine," - said the President of the Association "Subsoil users of Ukraine" Roman Storozhev.

 

 

March 11, 2015

Oilreview