Ukraine to lower natural resource royalties by half – finance minister …
Ukrainian Finance Minister Natalie Jaresko announced that Kyiv will be lowering its natural resource royalty taxes to spur business. The move comes following complaints from investors that the 55 percent rate introduced last year was too high.
“We decided to lower
the royalty taxes by about half, beginning with October 1,”
Jaresko said during US-Ukraine Business Forum taking place in
Washington, D.C.
The proposal still needs to be approved by the Ukrainian
parliament (Verkhovna Rada) to become official.
“By opening up the potential of our country’s natural
resources, we will be able to increase national security, build
up a serious competition in the industry, which will lead to the
creation of a large number of jobs in the energy sector,”
Jaresko stated.
READ MORE: Ukraine to stop buying Russian gas
after talks on new deal fail
The new law would see the royalty rate lowered from 55 percent to
29 for oil and gas fields less than 5 kilometers deep. The rate
for deeper fields would drop from 28 to 14.
“Because of the importance of the energy sector to Ukraine
and reducing reliance on imports and reducing our need for hard
currency to purchase imports, we have decided to propose a fairly
radical change from our existing policy,” Jaresko noted.
She added that Ukraine wants to drop rates for new oil and gas
fields even further, to 20 percent and 10 percent, next year.
This latest development is another attempt by Kyiv to become less
dependent on Russian gas.
READ MORE: Russia can’t give another gas discount
to Kyiv; price should match Poland’s – Putin
On April 1, Gazprom and Naftogaz signed an agreement on gas
supplies for the second quarter of 2015, known as the ‘summer
package.’ The price of Russian gas was set at $247.18 per thousand cubic meters,
which included a $100 discount.
According to latest estimates, Ukraine still needs to add 18
billion cubic meters of gas to its underground storage facilities
to have enough for the 2015-2016 winter heating season.
Russia and Ukraine failed to reach a new agreement on gas prices
at talks in Vienna at the end of June, after Russian Energy
Minister Aleksandr Novak and Ukraine’s Energy and Coal Minister
Vladimir Demchishin both admitted to reporters that the
negotiations had born no fruit. Demchishin added that there would
be a new round of talks in September.
In response, Ukraine suspended purchases of Russian gas and
Ukraine’s energy company, Naftogaz, ceased buying gas from Russia
on July 1.
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