Full cost coverage
All SAGESS costs covered by the CPSSP
As per the CPSSP / SAGESS agreement, approved by Ministerial decree, SAGESS recovers all operating, financing and exceptional costs from the CPSSP, guaranteeing a structurally balanced statement. The CPSSP receives monthly fees from oil operators, calculated to cover its own and SAGESS’ costs, balancing the oil reserves accounting system. In addition, the CPSSP is financially guaranteed up to three months of fees in case of default by oil operators.
SAGESS costs are divided into three major areas : product storage and stocks maintenance costs (renting facilities, storage at third party locations maintenance, stock renewal, product upgrades, control and insurance costs), expenses related to financing (bonds, NEU CP and bank loan) and overhead expenses.
Dedicated tax scheme
On a theoritical basis, SAGESS manages a break-even operation, but exceptionnaly can make a profit when SAGESS sells its strategic stocks and makes a profit as a consequence. SAGESS has a preferential tax scheme exempting it from income taxes. A tax article in the General Tax Code (1655 quater) exempts SAGESS from corporate taxes, when sales are performed under a government order or a request from the CPSSP, protects it from any risk of loss in case of stock sales, and allows the transfer of SAGESS shares only through a ministerial authorization.
As regards VAT, SAGESS is not subject to VAT for all storage-related operations and recovers the VAT when applicable (general tax rules).