Russia taps rainy-day fund to pay oil firms back for lower fuel prices at home
By Darya Korsunskaya
MOSCOW, April 19 (Reuters) - Russia expects to use about 210
billion roubles ($3.3 billion) from its National Wealth Fund
this year to pay back oil firms as part of a deal to keep down
domestic gasoline and diesel prices, a senior finance ministry
official said on Friday.
The government and oil firms agreed to cut wholesale
domestic fuel prices last year as a temporary measure to keep a
lid on petrol and diesel costs, a politically sensitive issue.
Under the deal, which runs from Nov. 1 until June 30, oil
companies are allowed only to slowly increase petrol and diesel
costs, which started to rise due to stronger global oil prices.
Russia is part of a global agreement to cut oil production
aimed at propping up crude prices, a major source of state
revenues. But that is hitting it back at home as the cost of
gasoline is one of the key factors affecting inflation - and the
central bank's main policy rate.
Alexei Sazanov, head of the finance ministry's tax
department, told reporters that in February alone the state paid
oil companies back 20-30 billion roubles for keeping fuel prices
Russia is using the National Wealth Fund (NWF) as a buffer
against potential external shocks and to pay out pensions or
support some important large projects at home. The spending
rules are strict as the state wants to preserve the fund.
Sazanov said that for 2019 as a whole, the payout from the
NWF to the oil firms was estimated at 210 billion roubles.
"If we are paying the cash, we want to get a quality service
in return. This service should result in the fact that the
consumer should see prices at the fuel filing stations based on
levels we pay back to the oil companies," Sazanov said.
Under a "fiscal rule", any revenue from oil prices higher
than $40 per barrel goes into the NWF, which is part of Russia's
gold and foreign exchange reserves, held by the central bank.
The NWF currently stands at $59 billion and is expected to
quadruple to over $200 billion, or 12 percent of gross domestic
product, in 2021.
($1 = 63.9288 roubles)
(Reporting by Darya Korsunskaya; Writing by Katya Golubkova;
Editing by Mark Potter)
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