Difficult decision, but forced — Kazakh PM on raising fuel prices

As a result of the Government session, held on Tuesday, April 4, Prime Minister Alikhan Smailov made a statement to the media and explained the situation with the upcoming increase in prices for fuels and lubricants, El.kz cites primeminister.kz.

"This is not an easy decision, but it is forced. If it is not done now, then in the near future we will face a shortage of fuel," he stressed.

Alikhan Smailov noted that Kazakhstan has the highest level of consumption of diesel fuel per capita at 370 liters per year. By way of example, Russia consumes 225 liters, Kyrgyzstan 98 liters and Uzbekistan 44 liters. However, the level of consumption in our country continues to grow at an increasing rate.

"This is due to an increase in the volume of exports of fuel and lubricants to neighboring countries by transit transport and in the form of "gray" exports. While the real consumption in the major sectors of the economy of the country has not changed," Prime Minister said.

According to Head of Government, the Government is taking all measures to increase the production of fuels and lubricants. Thus, last year a record volume of diesel fuel was produced in the country of 5.2 million tons. In general, over the past 5 years, production of gasoline increased by 70% and diesel fuel production increased by 33%.

"Our refineries are working at their capacity limits. However, we constantly face the risk of shortages of petroleum products. The main factor of exports and shortages are low prices of fuel and lubricants in Kazakhstan. For example, diesel is 45% more expensive in Russia, 64% more expensive in Kyrgyzstan, and twice as expensive in Uzbekistan. As a result cheap fuel flows in different ways to neighboring countries," he said.

Alikhan Smailov said that in March the consumption of fuel and lubricants increased by 15% compared to the same month last year. In this regard, this year the republic, if not to reduce the disparity of prices, may face a shortage of up to 850 thousand tons.

"It turns out that our cheap fuel works for the economies of neighboring countries to the detriment of their own national interests. Therefore, to stabilize the situation in the market of petroleum products it is necessary to reduce the price difference. This will reduce the outflow of petroleum products from the country and meet the needs of the market. We have no other way," the Prime Minister said.

However, he stressed that agricultural producers are fully provided with cheaper diesel fuel at a price of 204 tenge per liter, the price for them will not change.

"The Government will take other measures to maintain the domestic fuel market and prevent any possibility of illegal exports," Alikhan Smailov concluded.

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