Refinery released from compulsory sale of foreign currency earnings

Contrary to our forecasts, the government approved a request of the refinery regarding their exemption from the mandatory sale of 30% of foreign currency earnings to the National Bank until 1st of July.

Comment

The sharp increase of export duties on oil products from Russia has worsened the economy of the Belarusian oil refineries, now the latter have to pay a much higher export duty on this type of fuel. Belarusian oil refineries cannot reduce the amount of oil refining given the existing governmental orders requiring 100% load.

Neither the State Concern Belneftekhim, nor the National Bank of Belarus have yet officially confirmed the information regarding the decision to release the refineries from the compulsory sale of foreign currency. Whether the government met the request of the refinery, it would be unlikely to straighten the financial situation of the refineries. For instance, Mozyr refinery, has $ 60 million loss in the first quarter, given it has the largest share of petrol in the structure of its outcome products. It is obvious that one of the strategies the Belarusian oil refineries could implement would be switching to production of other petroleum products however they will not succeed in minimizing losses completely.

This decision is an additional factor vis-a-vis devaluation, as the refineries are the main foreign currency donors.