In International Shipping News 13/02/2016
But with the excise duty raising the cost of the middle distillate components, many suppliers are now buying straight run fuel oil from the refineries and selling it directly as 380 and 180 CST, the source said.
A tax on marine gasoil, which includes MGO used for blending bunkers, has seen the premium on low-viscosity bunker fuel in St Petersburg shrink over the main 380 CST fuel grade since the start of the year.
The viscosity spread (the premium of 180 CST fuel over 380 CST) fell by to $4/mt in mid-February from $18/mt on January 4, Platts data shows.
Russia introduced an excise duty on all middle distillates including MGO, which ensures that all middle distillates have the same excise duty as diesel, from January.
The step was to discourage selling the cheaper MGO bunker fuel, which was previously tax free, at retail stations as an alternative to diesel.
To mitigate the impact of the excise duty on bunker companies, the law said that the duty paid on MGO would be refunded.
But while those who use MGO as marine gasoil are fully refunded and not affected by the excise duty, those who use it along with other middle distillate fractions for blending 380 and 180 CST are not exempt from the new tax, a source said.
The amendments to the tax code specify that a refund is granted when the bunker fuel supplier provides evidence of selling middle distillates.
MGO, along with other middle distillate fractions, are used for blending with fuel oil to produce 380 and 180 CST bunker fuel.
Source: Platts
