Ukraine may introduce an import duty on gasoline and diesel fuel to protect its refineries from Russian and Belarussian competitors who have access to cheaper oil, a senior energy official said on March 2.
The measure, certain to push up domestic fuel prices, could be taken within two weeks, Kostyantin Borodin, the head of Oil and Gas Industry Department of the Energy Ministry, said in an interview with Reuters.
“Today, three of the country’s refineries (out of seven) are working,” Borodin said. “We expect all but one … to be in operation (if the import duty is introduced).” Local refineries, including those owned by Russia’s TNK-BP and LUKOIL, have asked the government to tax imported gasoline at $179.9 per ton and diesel fuel at 80 euros per ton.
“Refineries in Belarus, Kazakhstan and Russia are getting oil with significant price discounts,” Borodin said. “In Belarus, where most imports come from, they can save $150 per ton of oil due to the difference in (Russian) export duties alone.”
Both Ukraine and Belarus rely on Russian oil supplies but Moscow applies a lower export duty to shipments for Belarus with which it has a customs union.
The volume of crude processed by Ukrainian refineries halved to about 10 million tons last year compared with 2005 when the country dropped the previous fuel import duty, according to the Energy Ministry data. Imports of oil products excluding heating oil grew to 4.5 million tons last year from 3.8 million tons in 2009.
“The volume of oil processed will grow by 50 percent this year (if the import duty is introduced),” Borodin said.
Opponents of the measure have said it would only accelerate inflation and will do nothing to stimulate much-needed refinery upgrades.
