Business May Pay a RUB 30 Billion Environmental Charge


The Ministry of Economic Development of Russia issued a negative opinion on the regulating impact on the draft Government Decree on determination of environmental charge rates.

At the end of last month, the Ministry of Nature of the Russian Federation submitted a draft Government Decree binding manufacturers and importers to pay a recycle fee at set rates. It is in particular assumed that a manufacturer will pay a fee of RUB 26,469 per ton of hair dryers or electric kettles (home appliances). The average annual waste in Russia is five billion tons generated by over six million entities. Developers set the same recycle rate for 36 product groups. A calculation methodology, waste collection and recycling system and finally environmental safety quality are to be discussed in more detail. According to previous estimates, if the current revision of the decree is enacted, business will have to pay a total of RUB 30,305 billion to the federal budget in 2016.

According to Vadim Zhivulin, Director of the Regulated Impact Assessment Department, Ministry of Economic Development of Russia, public meetings with entrepreneurs had been held before the opinion was drafted. "Our experts ask fair questions as to the rate calculation principle, equal calculations for the goods of different composition (and therefore processing methods) and the final recycling process with costs to be imposed on business. It is important to understand that any cost increase will affect the product end price," he said. "It is important for consumers and manufactures competing in the market alike." He believes that the recycling cost is multi-factor and includes waste processing infrastructure costs. However it is five times above OPEX and there are underutilised capacities in the processing sector and no new capacities are required.

The Ministry of Economic Development of the Russian Federation is against enactment of this regulation as it entails the risk of an unjustified increase in a load on business, inadequate development of the recycling system and other adverse factors resulting from this document. As there are no regulations or objective grounds for rate setting for differentiated product groups amidst the current uncertainty with regard to the use of any available recycling infrastructure, this an additional income will not be aligned with efficient spending for environmental safety.

Furthermore, Alexey Ulyukaev, Minister of Economic Development of the Russian Federation, held a meeting dedicated to freezing non-tax payments where an agreement was achieved to set 0 recycling standards until January 01, 2019 for all product groups, except for those containing batteries, buses, paper, and mercury lamps.