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Gazprom Faces Russian Tax Hike

by Tatiana Smolenskaya,, Moscow
27 March, 2012

Russia is considering a 'windfall tax' on extraordinary profits due to be made by the majority state-owned, gas extraction monopoly Gazprom to fund government spending pledges made by Russian Prime Minister Vladimir Putin as part of his re-election manifesto.

Russia, which has historically sold gas to the domestic market below prevailing market prices, will look to significantly hike gas prices, including through a 15% increase in domestic tariffs scheduled for July 2012, with a further increase being considered by Gazprom.

The government is reportedly considering hiking mineral extraction tax to retain 80 to 100% of the profit Gazprom will make from the price hikes.

The state-owned enterprise has already been slapped with a higher burden this year, with the extraction tax rate applied to its operation near doubling this year.

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