16:40 10.06.2015

Gas producers ask Poroshenko, Yatseniuk to take measures to cut royalties

2 min read
Gas producers ask Poroshenko, Yatseniuk to take measures to cut royalties

Private gas producing companies have sent a letter to Ukrainian President Petro Poroshenko and Prime Minister Arseniy Yatseniuk with a request to take measures to improve fiscal conditions and prevent the crisis in the sector from getting worse.

The letter, a copy of which has been forwarded to Interfax-Ukraine, was signed by the top managers of Poltava Petroleum Company, Smart-Energy, Burisma, KUB-Gas LLC, Tisagaz LLC and private joint-stock company Naftogazvydobuvannia.

According to the document, the revision of the gas production taxation deviates from the schedule. In March 2015, a working group was created under the initiative of the prime minister. The group was to draw up proposals on retrofitting the taxation of gas producers in the short-term and long-term outlook.

"The working group agreed a compromised approach to taxation in the short-term outlook, which implies that from July 1, 2015 royalties for gas production are set at 35% for depths up to 3 kilometers, 28% - for depths up to 5 kilometers and 15% - over 5 kilometers. This taxation system would have allowed retaining growth of tax payments to the national budget and stabilizing the situation in the gas production sector. Unfortunately, the issue has not yet been put for the discussion by the parliament," reads the letter.

Companies reported on the increased number of scheduled and off-schedule checks and pressure by state agencies.

Gas producer asked the president and premier to take the introduction of the new taxation system for gas production, taking into account approaches agreed with the working group, under their control, order the drawing up of effective measures to stimulate gas production, and discuss the issues linked to pressure on business in public.

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