New Tax Threatens to Destroy Gas Production in Ukraine
Independent gas producers in Ukraine are joining forces to pressure the government in Kiev to re-think its new gas tax before everyone makes a run for the border in search of new assets in a more stable environment.
Private producers have compiled a draft letter to Ukrainian Prime Minister Arseniy Yatsenyuk, criticizing the government’s doubling of taxes for gas producers, which was justified through the use of “wrong and misleading” data about private companies.
The private producers note that the 55% tax rate increase could “lead to the collapse” of large- and medium-scale gas projects in Ukraine, and “in general, significantly reduce the attractiveness of the Ukrainian oil and gas industry to foreign investors.”
They propose to provide the government with real data on the country’s independent producers and their investment and profitability. They are also proposing to create a working group with the ministry of finance and interested stakeholders to “explain in detail the repercussions of the 55% tax rate” for Ukraine’s budget, as well as for state-run Naftogaz and its subsidiaries and private producers.
For now, the new tax is planned to run through the end of this year—ostensibly to feed the war machine in eastern Ukraine. However, there is already talk of extending the new tax as of January 1, 2015, which will be the final blow to private producers firstly, and Ukraine’s energy independence, secondly.
Source: oilpricecom
