Russian lawmakers back windfall tax on Gazprom amid gas rally

The producer is set to pay an additional 1.25 trillion roubles in mineral extraction tax from September to November, or 416 billion roubles each month.
Image: Bloomberg

Russian lawmakers approved a temporary windfall tax on energy giant Gazprom PJSC, a move that will channel billions of dollars into state coffers as natural-gas prices soar.

The producer is set to pay an additional 1.25 trillion roubles ($22.2 billion) in mineral extraction tax from September to November, or 416 billion roubles each month, according to a bill adopted by the lower house of parliament on Tuesday. It still requires approval from the upper chamber and the president.

European gas prices have more than doubled this year as Russia’s war in Ukraine — and resulting international sanctions — drive up risks to supply. Gazprom’s exports to its key markets have shrunk since March as some nations were cut off entirely while others saw flows through major pipelines curtailed.

Despite lower shipments, the Russian exporter has gained from surging prices. The windfall tax, once approved, will direct more of those proceeds to the government — Gazprom’s largest shareholder — rather than to all investors.

Last week, shareholders at the company’s annual meeting voted against a record dividend payout of 1.24 trillion roubles, deciding such a move would be “unreasonable” in the current environment, Deputy Chief Executive Officer Famil Sadygov said. Since the state owns just over 50% of Gazprom, the new tax would be twice as lucrative for the budget than the proposed dividend.

“Of course, we must be ready to fulfill our obligations to pay taxes in an increased amount,” Sadygov said last week, adding that Gazprom’s priorities include expanding its domestic network and preparing for the winter season.

© 2022 Bloomberg

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