Government Wants to Increase Gas Rent  

by Olha Povaliaieva
Friday, February 11, 2022
 Government Wants to Increase Gas Rent  

Verkhovna Rada — the Ukrainian government, creates a source for subsidizing citizens and companies

The Verkhovna Rada has a draft law to impose rent on gas production with the price of its realization.

Thus, they want to create a source for subsidizing citizens and companies who suffer the most in case of significant price increases.

The author of the" rel="dofollow">idea explains that the increase in gas prices does not affect the production cost. As a result, there is an excess margin for which mining companies did not expect.

The tax base will be chosen at the highest price among three values:

  • The average customs value of imported gas, the value of gas at European hubs or Ukrainian exchanges;
  • The rent is suggested to remain unchanged if the gas price is up to $200 per thousand m³. Then the rate will increase by 10%  for every $200 of price.

Thus, for old wells with depths of up to 5.000 meters, the rate will be from 29% for prices of $200 to 69% for $800 per thousand m³.

If the wells are deeper, the rental rate will change from 14% for the price of $200 to 54% for the price of $200 per thousand m³.

For new wells with a depth of up to 5.000 meters rent price will be the same as for old ones.

As for those whose depth exceeds 500 meters, the rate will increase from 6% to 46%.

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