Ukraine Plans to Impose Duties on Oil Products to Limit Imports

Baku, 22 February (AzerTAc). Ukraine plans to exempt the oil import from value added taxation in 2012-2013 to support oil refineries, who could not withstand the competition with foreign producers in the conditions of the open market. The related draft law was submitted to the Ukrainian Verkhovna Rada (parliament). Introduction of duties will allow providing the work of the domestic oil refineries, in the first place, the Lisichansk oil refinery. A similar investigation of the Ukraine held in 2011, in the beginning of January. However, in November, the investigation was discontinued, and “special measures influence (i.e., the introduction of import duties), it was decided not to introduce. According to recent estimates Mintopenegro, the share of imports in the year 2012 has increased: in the consumption of gasoline in Ukraine for January-March of current year was 43,9% (which is by 6.6% more), of diesel fuel – 73%, which is 9.9% more, than for the same period of 2011. The authors of the document - representatives of the ruling Party of Regions - stated that Ukraine`s oil refineries had received about 20 million tones of oil a year since 2005. This year`s crude supplies dropped by almost ten times, as solely the Kremenchug oil refinery is operating. They are confident that the exemption of the facilities from the 20-percent VAT will make it possible to guarantee oil supplies to the refineries, which are the main employer in a town, as well as to draw foreign currency into the country owing to the hike of export of petroleum products. It is projected a growth of the budget revenues from the taxes on goods and wages. This week, the government discussed the possibility to impose a tax-free import of ten million tones of oil and the necessity to impose import duties on petroleum products. The expert believes that it will be reasonable to analyze the impact of benefits on the budget with the projected level of its deficit and limited possibilities of funding. In January-May, Ukraine`s oil refineries cut gasoline production by 27.4 percent, as compared to the same period of 2011, to 718,000 tones. The output of diesel fuel and heating oil almost halved. Over the first five months of the year, the republic imported 754,000 tones of oil, mainly from Russia. The supplies of Russia`s crude stopped on March, when the Lisichansky oil refinery was shut down.