Mechanisms are still missing

The political decision to provide benefits on the export duty on oil from the fields of Eastern Siberia has been made. The controversy about how to implement it descended to the level of the performers. At a meeting on April 9, Deputy Prime Minister Igor Sechin gave the relevant departments a week to develop an agreed draft resolution. The deadline expires tomorrow, but so far all the decisions discussed in the departments to one degree or another do not fit into the current legislation.

The export duty on oil from East Siberian fields will be reset to zero. “The decision has already been made by Prime Minister Vladimir Putin, and the Ministry of Finance supports it. Work is now underway on its implementation,” Finance Minister Alexei Kudrin said yesterday. At the same time, the press service of the Ministry of Finance refused to officially comment on the proposed implementation measures.

Back in February, the government agreed on the need to provide export duty benefits to Eastern Siberian fields and instructed departments to prepare proposals by April 10. At a meeting on April 9 with Deputy Prime Minister Igor Sechin, it turned out that the draft resolution was still not agreed upon, since all the proposed measures were in conflict with the legislation (see Kommersant of April 10). The departments were given another week to finalize it, but yesterday the ministries were still unable to explain what mechanism for administering the benefit would be used. Having received the corresponding instruction from the prime minister, the Ministry of Energy first proposed to simply include a benefit for Eastern Siberia in the draft resolution, but came across a protest from the Ministry of Finance: in accordance with the law “On Customs Tariffs”, the duty is not imposed on Eastern Siberia, but on the product - oil. The Ministry of Economy proposed to subsidize the duty rate for companies - this proposal was also rejected. Currently, the option that Alexey Kudrin proposed back in February is being studied—to develop a separate commodity code for East Siberian oil, register a new type of oil and zero the duty “for a new type of goods.” Other methods are in conflict with the law “On Customs Tariffs”.

As Alexander Sakovich, deputy head of the department of customs and tariff payments of the Ministry of Finance, explained to Kommersant, experts from the Ministry of Finance sent a negative review to Mr. Kudrin’s proposal. “There is a 2002 GOST “Crude Oil”, four classes, five types. I don’t know what else can be distinguished here,” he explained, noting that according to the law “On Technical Regulation” the procedure for approving a new standard that should be formalized a new type of oil requires a three-month discussion. It is unlikely that it will be approved by the end of the week within the framework of the law. In addition, according to him, the issue of administering the benefit remains unresolved: East Siberian oil will go through the East Siberia-Pacific Ocean (ESPO) oil pipeline mixed with West Siberian oil. According to the expert, if the volumes of East Siberian oil delivered into the pipeline are controlled by Transneft, such a scheme will carry the danger of corruption. The Ministry of Finance points out the enormous danger of providing such benefits in principle: today the Ministry of Finance is telling everyone that providing individual benefits is impossible, and as soon as the first gap appears, this argument will not exist. The situation of the early 90s may be repeated, when the duty actually did not apply, since everyone received benefits.

Yesterday, the Ministry of Energy, which is the main executor of the document, was unable to comment on the progress of work on the resolution. The Ministry of Economy was also unable to comment. Despite the tight deadlines that Igor Sechin set for departments, the government still has time to solve the problem: ESPO is expected to be launched at the end of 2009. An alternative solution to the task set by the Prime Minister could be to reduce the export duty rate for all companies without exception, which will allow them to save more money and use it to develop Eastern Siberia. Such proposals have not yet been officially announced, but, according to Kommersant, they are being discussed in the Ministry of Finance.

Alexander Kommersant-Gudkov

The decision on benefits for East Siberian oil has been made