The Romanian Petroleum Exploration and Production Companies Association (ROPEPCA) expresses its deep concern regarding the recent discussions held within the debates of the specialized committees of the Chamber of Deputies, regarding the tax on supplementary incomes obtained due to the deregulation of prices in the natural gas sector. Namely, on 27.11.2018, members of the Industries and Services Committee, together with those of the Budget, Finance and Banks Committee proposed to eliminate the possibility of deducting royalty from the above described tax and apply the tax to the unrealized reference price.
ROPEPCA believes that these possible decisions hit in the same time the Romanian natural gas extraction and processing industry and the pockets of energy consumers.
“Today, Romania's entire natural gas production, which ensures energy independence of more than 90% of imported gas, comes from the onshore deposits. Changes in the tax and regulatory framework of the onshore, upstream industry, unexpected and excessive in recent years, only endanger the indigenous petroleum industry as well as the investment climate, sending negative signals to the entire business environment on the lack of stability and predictability. ROPEPCA kindly requests the authors of the proposal modifying the mechanism of taxation applied to supplementary incomes to analyze the impact that it would have on the Romanian petroleum industry and remain at disposal, as a partner for dialogue as well as a representative platform of the actors that ensure Romania's energy security of supply, for information, analysis or discussions on the topic”, declares the President of the Association, Ms. Saniya Melnicenco.
The analysis carried out by ROPEPCA members briefly outlines the direct effects of the proposals to increase the tax burden on domestic gas producers:
Background: 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. Extended from one year to another, the tax became permanent this year through Law no. 73/2018. Now, legislators came back on the tax, bringing it into the discussions held by the specialized committees.
The Romanian Petroleum Exploration and Production Companies Association (ROPEPCA) was founded in November 2012, with the purpose of consolidating the image of the onshore upstream sector in Romania and of improving its relationship and communication with Government, regional and local authorities, with national agencies and with the general public. ROPEPCA is composed of 15 concession agreements titleholders. These agreements were signed by member companies with the Romanian state, based on the Petroleum Law in force. At present, ROPEPCA members hold the majority of the petroleum concession agreements for the onshore development and production blocks in Romania, representing for the years 2014-2017 cumulated investments of more than EUR 4 billion, contributions to the state budget of EUR 5.5 billion, and the creation and maintenance of 14,000 jobs.
Daniel Apostol, Secretary-General
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Anca Budu, Executive Administrator
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