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consumer pays, while Moscow points out it is giving huge energy subsidies to Belarus already.
In 2017, Russia was demanding that Belarus repay around $550mn for natural gas previously supplied by the state-controlled company Gazprom . Minsk bought Russian gas for $132 per 1,000 cubic metres, but it unilaterally lowered the price to under $80, saying this was a fair price trigging a debt row.
The debt row triggered a rapid escalation of measures by both sides. Since the start of July, Russian oil pipeline monopoly Transneft pumped some 40% less oil to Belarus than in the second quarter because of the claimed debt to Gazprom. Belarus in turn raised fees for the transit of Russian oil across its territory.
"They [the Russians] are treating us the same way as they are creating non-competitive terms for us. This is a matter of our discussion with the Russian president. Anyway, we should work in the given conditions," Lukashenko added.
The statement appeared against a background of media reports that Moscow intends to limit its credit support and oil subsidies to Belarus. According to Reuters, Russia is going to cut exports of refined oil products to Belarus in a bid to curtail re-exports from the country, which come at the expense of the Russian budget.
Russia is supplying Belarus’ two refineries with around 18mn tonnes of crude oil a year to help its neighbour meet domestic needs. Supplies are not subject to export duties as Moscow and Minsk have a joint customs zone, meaning that Russia is effectively supporting its neighbour with cheap energy.
In the past few years, Belarus has also increased imports of refined products from Russia, which are also free of duties, while increasing re-exports of refined products to European countries such as Poland and Germany, Reuters reported on August 10.
Russia is now seeking to effectively curtail re-exports of its refined products via Belarus by imposing limits on the volumes that can flow from Russia to Belarus after September 1. "Russia is imposing a ban on unlimited shipments of refined products to Belarus, arguing that it is facing lower budget revenues as volumes keep growing," Belarusian state energy company Belneftekhim wrote in a note commenting on upcoming changes.
It said Russia had asked Belarus to compensate for its budget losses for past supplies of refined products but gave no figure.
Multi-billion subsidies
Providing oil subsidies to Belarus cost Russia's budget $22.3bn in 2011-2015 , the Kremlin said in February. "Russia has provided and continues to provide wide-ranging economic, political and other assistance to Belarus, considering the special allied nature of our relations," the Kremlin said in a statement. "From 2011 until 2015, between 18 million and 23 million tonnes of oil was supplied to our Belarusian partners duty free. As a result, during that period, the Russian budget was off by $22.3bn. All of this is nothing if not direct and indirect support for Belarus."
Russia also intends to suspend the allocation of new tranches from $2bn support package agreed between Minsk and the Russia-led Eurasian Fund for Stabilisation and Development (EFSD) in 2016, as well as suspend negotiations on a new $1bn intergovernmental loan, according to Reuters.
6 BELARUS Country Report September 2018 www.intellinews.com