Bìznes Inform (Dec 2019)
Rents for Natural Gas in the Context of the Phenomenon of «Dutch Disease»: Ukrainian realities
Abstract
It is determined that a simplified understanding of the problem of rental regulation of natural gas production does not allow to set reasonable rates of rent for the extraction of this type of hydrocarbons and to make a breakthrough in the direction of strengthening the energy self-sufficiency of the national economy, as well as to reduce the recurrences of domestic manifestations of the «Dutch disease». The essential characterization of the administration of rents for the use of subsoil for natural gas production as an important component of the system of fiscal regulation of subsoil use and a significant factor in terms of filling financial funds of the State and territorial communities is disclosed. It is defined that the existing mechanism for administration of rent for the use of subsoil for natural gas production has a purely fiscal focus, generates price inflections in the natural gas market and artificially inflates the cost of blue fuel and this ultimately has a negative impact on the energy self-sufficiency of the national economy. Existing approaches to setting rents for natural gas production are considered, in view of the importance of this type of hydrocarbon raw material for the development of the national economy and its permanent insufficiency. Research has shown that, despite the upward trend in the dynamics of nominal rental income for the use of subsoil for natural gas production in the State budget of Ukraine, a real increase in revenues of this type of fiscal payments to the main financial fund of the State is not observed because of the absence of an uptrend in the production volumes of this component of hydrocarbonraws. It is determined that excessively high rates of rent, which are paid by the gas producing companies, do not provide the necessary incentives to increase investment flows in the development of the material-technical basis of gas production and do increase the cost of blue fuel for different categories of consumers, which ultimately leads to a decrease in the competitiveness of industrial production and a curtailment of business activity. It is substantiated that measures to reduce the rates of rent for the use of subsoil for natural gas production should be accompanied by the application of a new formula for calculating the price of blue fuel, which balances the price of imported natural gas and the natural gas of domestic production.
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