Ukraine finance ministry criticize energy ministry plan to revive oil refining

Interfax quoted the Finance Ministry and Economic Development and Trade Ministry have said the Energy and Coal Industry Ministry of Ukraine plans for reviving Ukrainian oil refining will be ineffective.

The conclusions are stipulated in materials of a meeting of the revival of Ukrainian oil refining held at a cabinet on Monday which have been sent to Interfax-Ukraine.

The ministries criticized the initiatives of the energy ministry to cancel value added tax for imports of 10 million tonnes of oil to Ukraine for refining at Ukrainian oil refineries and introduce duties on imported fuel and quotas for them.

The Finance Ministry said that the introduction of duties violates the requirements of the World Trade Organization (WTO) and could provoke response measures from other countries.

The ministry said that duties are imposed only when there is a threat to Ukrainian producers. The interagency commission for international trade established in late 2011 that fuel imports do not bring such a threat.

The Economic Development and Trade Ministry said that the introduction of duties in the WTO is possible, but that it requires clear grounding by Ukraine and would require obligatory compromises from Ukraine for other groups of goods.

The ministries said that the duties as a fiscal measure are leading to the large rise in the prices of fuel and other goods. In turn, the increase in the prices of fuel leads to a fall in their consumption, so this would not increase refining at Ukrainian oil refineries to the expected level.

According to the Economic Development and Trade Ministry with duty of 5% to 10% the price of A-95 petrol could grow by 44-87 kopecks and with the duty of 5% the price of diesel fuel will go up by 19 kopecks.