Slovak Parliament Rows Back on Taxing Main Gas Transit Pipeline

(Reuters) — Slovakia's parliament voted on Friday to uphold a presidential veto striking down a tax on the country's gas pipeline network, which operator Eustream warned would harm financing and could destabilize a key supplier amid an energy crisis.

The tax, planned at 6,000 euros per kilometer of pipeline, or around 126 million euros ($134 million) per year, was approved late last year as part of efforts to raise revenue for the 2023 budget that already sees a 6.4% deficit of gross domestic product.

Eustream said in December it had been downgraded by credit rating agencies as flows of Russian gas dropped after Moscow's invasion of Ukraine, and the outlook for the remaining volumes remains uncertain.

Eustream has two bonds maturing in 2025 and 2027 worth a total of 1 billion euros and has said it needed to conserve cash for repayments.

"We welcome that parliamentary deputies followed the president's objection. We consider that to be responsible not only toward a strategically important company but also for the predictability of the Slovak investment environment," Eustream spokesperson Pavol Kubik said.

Eustream operates a pipeline network that mostly carries Russian gas from Ukraine to Austria, and also has interconnections with the Czech Republic, Poland and Hungary.

Gas flows from the east have dropped as Europe reduces its dependency on Russian gas, but the link remains operational and, alongside the Turkstream pipeline, the main current route for Russian pipeline gas to Europe.

Eustream is 51% state-owned with the rest held by Czech-based EP Infrastructure, owned by Czech firm EPH and a Macquarie Infrastructure and Real Assets (MIRA)-managed consortium.

Friday's vote adds to pressure on the budget, on top of lower forecasts of tax revenue due to slowing inflation.

($1 = 0.9416 euros)

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