The investors will become reluctant to further projects and the natural gas end-prices will increase if deputies endorse the amendments to Ordinance 25/2017 under the form proposed by the expert committee, the Romanian Petroleum Exploration and Production Association (ROPEPCA) stated in a press release.

Eventually, the gas supply security will be negatively affected, the association explained.

ROPEPCA expressed its “deep concern” regarding the discussion related to the tax on supplementary incomes obtained due to the deregulation of prices in the natural gas sector. Namely, on November 27, members of the Industries and Services Committee, together with those of the Budget, Finance and Banks Committee proposed to eliminate the possibility of deducting the royalty from the above described tax and apply the tax to the unrealized reference price (namely the Baumgarten benchmark price).

Government plans to take 60%-80% of the supplementary income. With the proposed change, the Government will take up to 18% as royalty and 60%-80% (of the supplementary income) as supplementary tax, leaving the companies with no incentive to further invest, ROPEPCA argues.

Taxation of supplementary incomes was introduced in 2013 as a temporary tax aimed at protecting vulnerable consumers to the effects of the deregulation of natural gas prices. Initially, this additional tax applies to the price of more than RON 45.71 / MWh, in a rate of 60% applied to the difference between the selling price and that threshold. Earlier this year, the tax was increased to 80% for the price difference of over RON 85 / MWh, the initial difference up to this price being further taxed by 60%, the producers being able to deduct from this tax the value of royalties and that of the investments made.

editor@romania-insider.com