Fuel price freeze extended until July

The government and oil companies nevertheless agreed to extend the freezing of prices for gasoline and diesel fuel until July 1 without changes, said Deputy Prime Minister Dmitry Kozak . The previous agreement was valid until March 31, but it was not immediately possible to extend it due to a dispute over compensation to oil workers - this year alone, their lost profit amounted to 110 billion rubles.

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• “Signed already, everyone signed,” Deputy Prime Minister Dmitry Kozak answered reporters when asked if new agreements had been signed with oil companies to stabilize the fuel market.
• Sources of Vedomosti reported that Kozak had no new documents at the meeting last week - the minutes of the meeting indicate that the companies agreed to comply with the terms of the agreement with the Ministry of Energy and the Federal Antimonopoly Service of November last year. Signing the minutes of the meeting automatically renews the previous agreement.
• Later in the evening, RBC sources in oil companies reported that they had not seen the text of the agreement with the Cabinet, according to which they should extend the freezing of gasoline prices. They stated that they had read and approved only the minutes of the meeting with Deputy Prime Minister Dmitry Kozak.
• This means that the government has not figured out how to fix the terms of the agreement and satisfy the demands of the Ministry of Finance, the Ministry of Energy, the Federal Antimonopoly Service and the oil industry at the same time.
• Kozak on Friday said that the agreement should become self-adjusting, but he did not specify how to do this.
• The essence of the agreement is that the government stimulates the supply of fuel to the domestic market: oil companies are compensated for 60% of the difference if the export price of fuel is higher than the cut-off price. Now the cut-off price is 56,000 rubles. for gasoline and 50,000 rubles. for diesel fuel, but the companies wanted to reduce it to 51 thousand rubles and 46 thousand rubles.
• The Ministry of Finance was against it - it would cost the budget up to 190 billion rubles. Among the possible sources of compensation called the funds of the National Wealth Fund, the increase in duties on semi-finished fuel products and the increase in the tax on the extraction of minerals.
• If the export price of fuel (minus transportation costs and duties) is below the cut-off price, the oil companies had to pay extra to the budget. Their lost profit for January-March amounted to 110 billion rubles.
• The government still has a reliable leverage on the industry: it can increase the export duty on gasoline and diesel fuel to 90% of the export duty on oil and leave all the fuel in the country.

Context. An agreement on the stabilization of prices for petroleum products between the government and oil companies was signed in November 2018. Oil companies promised to freeze fuel prices and keep them at the level of early June 2018. Ten companies participate in the agreements: Rosneft, Lukoil, Gazprom and Gazprom Neft, Surgutneftegaz, Tatneft, TAIF Group, RussNeft, Neftegazholding and Novy Potok.

The agreement limited the rise in fuel prices at the cost of de facto manual regulation: since the summer of 2018, they have been growing within the established limits. In January, companies could raise prices at gas stations by 1.7% due to the increase in VAT, each next month - by no more than 0.33%.