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EastRussia Bulletin: Amur Region Factory Claims Government Grant

EastRussia Bulletin: Amur Region Factory Claims Government Grant
Photo: EastRussia

The Russian government has identified a mechanism for introducing a reverse excise tax on liquefied petroleum gases (LPG) and ethane. Two large projects in the east of the country have the opportunity to receive a subsidy - the Amur gas chemical complex of SIBUR and the Irkutsk polymer plant of the Irkutsk oil company, according to the next published issue of the EastRussia newsletter.

The reverse excise tax on LPG should start from 2022 year in the amount of 4,5 thousand rubles per ton, from 2024 year it should increase to 6,5 thousand rubles per ton, and from 2026 year to 7,5 thousand rubles per ton. Companies that can introduce petrochemical capacities after the 2021 year or enter into an agreement with the Russian Ministry of Energy to invest at least 65 billion rubles in the sector can apply for such a subsidy.

Also, the government decided to introduce a tax on the production of associated petroleum gas (APG) at a rate of 50 rubles per thousand cubic meters in 2022, 100 rubles - in 2024 and 150 rubles - in 2026. SIBUR expressed dissatisfaction with this option - the company fears that the tax will increase prices for raw materials and reduce the profitability of existing projects.

Thus, SIBUR, being one of the main beneficiaries of introducing a reverse excise tax on LPG, which will help expand the capacity of the AGHK project and make the Amur plant the world's leading producer of base polymers, at the same time faces significant risks from the introduction of MET for APG. The maximum losses for the company at the current level of processing may amount to about 3,5 billion rubles per year.

Detailed analytics on this and other relevant topics can be found in EastRussia Weekly Newsletter.

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