Issue of sharp increase in hydrocarbon royalty not on agenda, says ecology minister
Kyiv, May 17 (Interfax-Ukraine) – The cabinet of ministers does not plan to sharply increase royalties for the extraction of hydrocarbons, Ecology and Natural Resources Minister of Ukraine Eduard Stavytsky said at a press conference at Interfax-Ukraine on May 16, 2012.
"We're tightly cooperating with the Finance Ministry and the State Tax Service so as not to make a sharp increase [in royalties], but act in line with global trends and prices, so that investors' ardor is not quenched. I would say that the issue is not on the agenda now," the minister said.
He said that the Ecology and Natural Resources Ministry submitted a detailed analysis of risks that the sharp increase in royalties could bring the government.
As reported, the issue of amending the Tax Code regarding the royalty for natural gas extracted in Ukraine was taken off the agenda of a cabinet meeting on April 11, 2012 at the request of the Ecology and Natural Resources Ministry.
In early April, the Finance Ministry of Ukraine said that the government's initiatives to increase royalties and duties for the use of deposits are balanced and do not do much damage to producers.
The Finance Ministry said that this would create equal conditions of taxation for private and state companies that sell gas to household at regulated prices. The margin of gas extraction after the amendments made should be around 40%.
According to the Tax Code, at present, the gas royalty (including associated petroleum gas) is UAH 237 per 1,000 cubic meters from depths up to 5,000 meters and UAH 118.50 per 1,000 cubic meters for depths more than 5,000 meters.