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Energy

Transneft says more taxes mean higher oil tariffs

*Russia’s FinMin proposes property tax for monopolies

*Transneft sees its property tax burden at $1 bln by 2013

*Tax will be paid for by raising transit fees significantly

MOSCOW, Aug 19 (Reuters) - Russia's oil pipeline monopoly Transneft TRNF_p.MM may raise transport tariffs from 2012 due to Finance Ministry plans to abolish its exemption from paying property taxes, the company spokesman said on Thursday.

The Russian Finance Ministry proposed a bill earlier this week that would make natural monopolies including Transneft and the state-owned gas producer Gazprom GAZP.MM start paying taxes on infrastructural property beginning in 2012.

“To pay these taxes we will have to colossally increase our pipeline transit tariffs,” Transneft spokesman Igor Demin told Reuters.

Transneft, which profits solely from oil shipment fees, will raise tariffs by 9.9 percent from December, and had considered cutting tariffs in 2011 once it finished large construction projects, including a pipeline to the Baltic Sea [ID:nLDE66S15L].

“This will no longer be possible because we will have to find a way to pay taxes on our property, and the tax burden will only increase as we finish new projects,” said Demin.

A source in the Federal Tariffs Service (FTS), which sets the oil transport fees for Transneft, told Reuters that the introduction of a property tax could result in a tariff rise of around 10 percent.

Oil companies say tariff hikes hinder development of new deposits and substantially increase costs.

Gazprom's oil arm Gazpromneft SIBN.MM said during a conference call on Thursday that this year's tariffs increase of 15.9 percent from January, was behind its higher operating costs for the quarter [ID:nLDE67H0BA].

“Our operating costs have in fact come down if you exclude the costs related to the tariffs of natural monopolies,” Chief Financial Officer Vadim Yakolev told analysts and investors.

The Finance Ministry proposes to collect a 1.1 percent property tax from the monopolies in 2012 and increase it to 2.2 percent in 2013.

Going by this guidance and factoring in property revaluation and new projects, Transneft, which currently pays no property tax, said it will have to pay $888 million in 2013; $1.08 billion in 2014; and $1.15 billion in 2015.

While Transneft makes recommendations on new tariff rates every year, the final decision lies with the government. (Reporting by Jessica Bachman; editing by Keiron Henderson))

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