Russian Lawmakers Approve $1.14bn Tax Hike for Gazprom

A $1.14 billion tax hike for gas producer Gazprom effective from September 1 was approved by Russia’s lower house of parliament on Thursday, the results of a plenary session showed.

Lawmakers in a third and final reading agreed to raise the mineral extraction tax, the single largest tax item, for Gazprom.

Deputy Finance Minister Ilya Trunin was cited by Kommersant business daily last month as saying the government had decided to increase the tax as Gazprom was not paying out 50 percent of its net profit in dividends to the state budget.

Gazprom has planned a record $20.5 billion investment program for this year and a record amount of lending amounting to $6.6 billion. The company needs funds to complete the strategic gas pipelines Nord Stream 2, Turkish Stream and the Power of Siberia.

“Of course, $1.1 billion rubles is not so much that it significantly influenced Gazprom, especially given that the export price of gas will rise this year to at least $250 per thousand cubic meters from $200 in 2017,” says Dmitry Marinchenko from credit rating agency Fitch.

“The question is rather liquidity – Gazprom is gradually spending its” pillow “on investments, besides there is a potential damages payment to Ukraine’s Naftogaz for $2.6 billion (according to the decision of the Stockholm Arbitration Court”, the analyst said.

Litigation with Naftogaz could spoil Gazprom’s plans to attract funds. According to sources, the company last week canceled entry into the Eurobond market in pounds because of fears of arresting assets at the request of the Ukrainian company. But Gazprom still has the possibility of borrowing in the Russian Federation and raising funds in Europe through less public instruments – syndicated and direct loans, the report said.