TNK-BP is First in Russia to Get FTS Investment Tax Credit for Energy Efficient Projects

TNK-BP is one of the major power consumers in Russia (ca. 1.5% in the country's energy budget). The Company is carrying out a number of activities aimed to optimize and reduce power costs, including the implementation of the energy management system, upgrade of assets, and search for new technology solutions.

The agreement between FTS and TNK-Nyagan (TNK-BP Group of Companies) envisages the provision of tax benefits to the Company in the amount of 50% of the profit tax with a 5-year payment deferral. The investment tax credit applies only to the federal part of tax burden, while payments to the regional budget will be made in full.

Following the implementation of this "pilot" project the Company will consider the expediency of rolling out this initiative, with account of the results of partial substitution of the Group's existing credit portfolio for the investment tax credit nominated in rubles.

"The investment tax credit agreement between TNK-Nyagan and FTS is an important step towards increasing the efficiency of the tax system: the Company gets an extra incentive to develop its business and the state gets a clear, positive and stable economic effect. Being granted the investment tax credit will allow allocating additional funds to implement capital intensive projects in producing regions," says Sergey Ivanov, TNK-BP's Vice President, Tax Division.