Russia reinstates fuel subsidies to stabilize prices in domestic market

By Elena Teslova

MOSCOW (AA) - Russia on Friday reinstated subsidies, or damper payments to oil refineries to curb rising fuel prices.

"This will provide economic incentives to saturate the domestic market with fuel, restrain the growth of wholesale exchange prices, which as a result will contribute to maintaining a stable price in retail at a level close to inflation," the government said in a statement.

Damper mechanism is a tax preference for oil companies that sell in the domestic market petroleum products when their prices are lower than export prices.

It helps to create approximately equal profitability when selling petroleum products both for export and to the domestic market, and is designed to limit fuel prices in Russia.

On Sept. 21, the government also banned the export of petrol and diesel fuel to stabilize the fuel market, which has been experiencing a long period of price growth.