State Duma passed bill to rank heavy fuel oil as medium distillates from 1 April 2020

The bill on introduction of amendments into the second part of the Tax Code of the Russian Federation was read the third time by the State Duma of Russia on 24 July 2019 (Bill No 752627-7, in the part of adjusting the “damping mechanism” parameters).

According to the State Duma statement, it is proposed to acknowledge all dark oil products including heavy fuel oil as excisable and to rank them as medium distillates from 1 April 2020. That measure will let prevent sale of fake medium distillates as heavy fuel oil or vacuum gasoil.

When using medium distillates as fuel for production of heat and electricity as well as for bunkering of ships and/or structures, excise duty coefficient 2 is applied. 

Heavy fuel oil accounts for 70% of bunker sales in Russian ports.

From 1 January 2015, sulfur content in any ship fuel used to power vessels operating in the Baltic and the North Seas should not exceed 0.1% according to IMO restrictions. IMO’s global 0.5% sulphur cap coming into effect on 1 January 2020.