Russia's Putin orders government to stabilise retail fuel prices

Russian President Vladimir Putin on Wednesday ordered his government to make sure retail fuel prices stabilise, seeking additional measures to balance the domestic market following the introduction of a ban on gasoline and diesel exports. Putin also told the cabinet it needed to act swiftly and that reviewing oil industry taxes was an option.

Russian President Vladimir Putin on Wednesday ordered his government to make sure retail fuel prices stabilise, seeking additional measures to balance the domestic market following the introduction of a ban on gasoline and diesel exports.

Putin also told the cabinet it needed to act swiftly and that reviewing oil industry taxes was an option. The government on Thursday introduced a temporary ban on exports of gasoline and diesel to all countries outside a circle of four ex-Soviet states in order to stem an increase in domestic fuel prices.

While prices did initially ease on the local commodity exchange, they began to creep up again after some easing of the restrictions was announced over the weekend. "The measures have been taken, but the prices are rising... The consumer needs a result," Putin said. "I'd ask you to react to events more promptly."

Deputy Prime Minister Alexander Novak told Putin that the government has been considering additional measures. He said that there are proposals to restrict grey fuel exports and to raise fuel export duty to 50,000 roubles ($518.24) per ton from 20,000 roubles for resellers.

The government is also reconsidering a cut to so-called damper payments, or subsidies to oil refineries, which began this month, he said. Russia has suffered shortages of gasoline and diesel in recent months. Wholesale fuel prices spiked, although retail prices are capped to try and keep them in line with the official rate of inflation.

The crunch has been especially painful in some parts of Russia's southern breadbasket, where fuel is crucial for gathering the harvest. A serious crisis could be awkward for the Kremlin as a presidential election looms in March. ($1 = 96.4810 roubles)

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