Kazakhstan faces fuel crisis: Export ban and price worries
In response to fears of fuel shortages, Kazakhstan's authorities are imposing a ban on fuel exports while simultaneously planning to deregulate prices. Concerns exist that such measures could lead to unrest similar to the violent events of January 2022. An increase in fuel prices is anticipated to also result in higher costs for all other goods and services.
The decision on the fuel export ban, effective from Wednesday, was reported that morning by the pro-government portal Zakon. The decision mandates a "ban on the export of petrol, diesel, and certain types of petroleum products by road transport from the territory of the Republic of Kazakhstan, including to member states of the Eurasian Economic Union (EAEU, which consists of Kazakhstan, Russia, Belarus, Armenia, and Kyrgyzstan)."
Furthermore, a ban on exporting petroleum products by rail has been introduced - except in cases where they are exported as part of humanitarian aid or aid provided to address the effects of natural disasters, accidents, or catastrophes. The decision makes exceptions for the export of lubricating oils or aviation fuel, subject to specific conditions. An effective date for the decision has not been provided.
The export ban is intended to prevent a fuel shortage in conjunction with planned price increases. On Tuesday, the Radio Liberty portal reported that Kazakhstan's authorities plan to gradually deregulate fuel prices. The government currently largely subsidises fuel prices, allowing petrol, diesel, and LPG prices to remain the lowest in Central Asia and among the lowest globally.
Fuel is only cheaper in countries producing and exporting oil on a large scale, such as the Gulf states. From 1 February, retail sales prices are expected to increase by 10 per cent and, in the longer term, even by 40 per cent.
In mid-January, Kazakhstani media published draft regulations signed by Energy Minister Almasadam Satkaliyev regarding fuel price increases. Although these drafts were subject to public consultation, their outcomes do not affect the implementation of the new regulations.
The Ministry of Energy justifies the increases, stating that the Kazakhstani fuel market is unprofitable, with key state-owned enterprises incurring losses. In the coming years, a more than twofold increase in LPG consumption is anticipated.
Additionally, the increases are justified by "significant price differences in petrol (from 40 to 138 per cent) and diesel (from 20 to 79 per cent) compared to neighbouring countries, which gives rise to 'grey (unregulated) exports' - thus the decision to impose a fuel export ban. Another reason for the planned price increases is introducing a unified energy, oil, gas, and petroleum products market within the EAEU, which is scheduled to start functioning in 2027.
Deregulation of prices. The largest riots in history
Radio Liberty reminded that in January 2022, when the government of Kazakhstan deregulated LPG prices, doubling them, the country witnessed the largest riots in the independent state's history.
Over 200 people were killed, and trials of both riot participants and law enforcement officers who brutally suppressed them continue to this day. The government promises this time that there will be no "violent" and "shocking" price increases, and the changes will "not entail negative socio-economic consequences."
However, public opinion suggests otherwise. Some express fears that protests could erupt once again. An increase in fuel prices will also mean an increase in the prices of all other goods and services. Fuel prices in Kazakhstan are indeed low (the price of a litre of petrol is about £0.49, which is under £2.05, and LPG is about £0.20, which is over £0.82), yet the median income officially amounts to £448 per month.
