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Press Review

Press review: Helsinki summit to decide fate of sanctions and China pursues more pipelines

Top stories in the Russian press on Tuesday, July 10

Press review: Helsinki summit to decide fate of sanctions and China pursues more pipelines

Top stories in the Russian press on Tuesday, July 10

RBC: Sberbank CEO warns oil sector of financial risks from tax reform

In a letter by Sberbank CEO Herman Gref to President Vladimir Putin late last week, the head of the nation’s top lender warned about the risks the oil refining industry and its lenders are facing as a result of the conclusion of the tax maneuver in the oil sector, RBC writes citing two branch consultants and an official from one of relevant ministries.

The so-called tax maneuver in Russia’s oil sector, which currently envisions full cancellation of export duties on oil and petroleum products with concurrent mineral extraction tax growth within six years to 2024, bears risks for the country’s petroleum refining industry and banks providing loans for it. The CEO cautioned that the tax maneuver as it is today, can turn investments poured into upgrading refineries into sunk costs, and even trigger the bankruptcies of a number of refining plants, sources told the publication.

Sberbank has extended around 455 bln rubles ($7.3 bln) worth of loans to oil producers for modernization works, while the total amount of funds provided by Russian banks to oil companies for plants’ upgrades tops 800 bln rubles ($12.8 bln), sources said referring to Gref’s letter. Once the tax maneuver ends, it can make oil producers unable to service loans, which means loans to banks will not be paid back. Eventually, it may snowball into a drop in Sberbank’s profit and dividend payouts of up to 240 bln rubles ($3.8 bln) until 2024, RBC says. According to the paper’s sources, Gref has asked Putin to revise the reform’s parameters, adding that the bank’s experts are ready to assist in polishing up the bill.

MegaNews

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