New excise system to prompt increase in gasoline prices

The implementation of the new excise system will prompt an increase in gasoline prices, Deputy Minister for Antimonopoly Policy Anatoly Golomolzin said in an interview with RosBusinessConsulting. The official reiterated that according to the changes in tax legislation that would come into effect on January 1, 2003, the excises for gasoline would be paid by gas stations, while they were currently paid by oil processing plants. Additionally, a system of excise repayment will be used in respect to the retailers that own gasoline production or sale facilities as private property. So for independent gas stations a pre-payment procedure will be introduced. According to Golomolzin, the implementation of this scheme will oust small and independent companies from the oil products market.

Mikhail Zak, analyst of the Prospekt investment company, believes that the introduction of the new excise system will really lead to growth in gasoline prices by around 10-12 percent. However, one should bear in mind that the government needs income, while the primary source of this income is oil business. At the same time, one should not expect a full disappearance of private gas stations. Of course, not all of them will be able to endure competition, but on the whole the private gas station market will retain its broadness, the analyst said.