Russian stocks are down another 1.5% this morning and the weakness is being attributed to Gazprom ( OGZPY , quote ), the biggest stock on the Moscow market. Blame politics.
Basically everyone in the Russian government outside Vladimir Putin's ruling United Russia party favors raising the tax on OGZPY's sprawling gas operations -- currently half the rate that independent oil producers like Lukoil ( LUKOY , quote ) and even stat-run Rosneft now pay.
While the liberals, communists and social democrats do not have a firm grasp on power, their more prominent position in the polls is encouraging them to start lobbying already.
Doubling OGZPY's tax burden -- bringing it in line with its oil-oriented counterparts -- would drain $23 billion a year from its profits but help balance Moscow's budget.
The question is whether Gazprom will simply pass on the tax to its customers in the form of higher supply charges. Gas utility rates are already going up 15% in Russia this year to subsidize rising costs.
Ironically, the Kremlin is the largest shareholder in OGZPY and so has the highest vested interest in its profitability.
Spending another $23 billion a year in taxes would more than wipe out the benefit OGZPY recently delivered to its shareholders in the form of $6 billion in added dividends .
And that, in turn, was one of the few bits of good news Moscow has gotten since the election, so look to see RSX under pressure down the road.
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