The Ukrainian government has abandoned a proposal to eliminate value-added tax on imports of crude for refining at domestic oil refineries, Deputy Energy and Coal Industry Minister Volodymyr Makukha told reporters on Wednesday.

"There are objections from the Finance Ministry and Economics Ministry, and we decided, since they don't support us, to drop this issue," Makukha said.

He said this concerns a March 21 ruling by the government proposing to amend the Tax Code to introduce a zero VAT rate for imports of 1 million tonnes of crude for national oil and gas company Naftogaz Ukrainy.

The Ukrainian authorities are looking for ways to support the country's oil refining industry. The Energy and Coal Industry Ministry is proposing to exempt oil imports from VAT and impose prohibitive duties on imports of oil products and import quotas.

Only two of Ukraine's five oil refineries - Lysychansk and Kremenchug - and the Shebelynka gas processing plant refined crude this year. However, the Lysychansk refinery shut down for repairs in March and might subsequently be mothballed.

Ukrainian plants reduced crude oil refining by 41.6% year-on-year to 2.667 million tonnes in the first half of 2012.