KazMunaiGas executives on necessity of retail fuel price hikes21 august 2014, 14:20
Prices for gasoline in Kazakhstan have to be raised by 10-15%, executives of KazMunaiGas Processing & Marketing told a briefing in Astana, Kazakhstan’s capital city, today, a Tengrinews.kz journalist reports.
“According to the Company’s experts, there are two factors in favor of raising the prices … these are the 20% currency devaluation that took place in February and seasonal price hikes given the growing demand. We suppose the anticipated 10-15% raise will constitute a fair price”, Erlan Koibagarov, Vice Director General for Marketing said.
He emphasized that the statement made by Uzakbai Karabalin that the prices would remain unchanged throughout August is valid.
He didn’t specify the timing for new prices, adding that the final decision should be taken by respective government bodies. According to the Company’s executives, efforts to maintain the prices at the current level are entailing losses for the Company.
“We cannot breach the regulation [prescribing to maintain prices at a certain level]. The volumes we are supplying are bringing losses. The loss for the Company in July alone made up $4.3 million”, Mr. Koibagarov said.
“The Government regulates prices for types of gasoline to protect economically vulnerable populace. These are AI-80, AI-92, AI-93 types of gasoline and diesel fuel. When it comes to more expensive categories such as AI-95 and AI-96, there are no regulations in place. These are the types to be regulated by the market forces … I cannot quote the precise new prices, but the price should be based on the prime cost within the current economic situation”, Yerbolat Kozhabayev, First Vice Director General at KazMunaiGas Processing & Marketing.
“We have to admit there is a certain shortage of fuel … the situation will not improve substantially as long as the country'’ oil refineries are being overhauled”, he elaborated.
According to him, Kazakhstan-based oil refineries produce a combined 1.9 million tons of AI—92 gasoline a year, with the domestic demand standing at 2.8 million tons.
Back August 15, KazMunaiGas Onimderi, the sole national operator in charge of supplying petroleum products from the neighboring Russia, stated that the current reserves of AI-92 gasoline would be sufficient to meet the domestic demand in the nearest 7-10 days. The Company suggested that one of the reasons behind the fuel shortages across Kazakhstan might be limited sales of fuel by the market players looking forward to retail price hikes.
Bolat Auetayev, Head of the Kazakh Association of Fuel Market Players, admitted early August that fuel stations in Almaty, Kazakhstan’s biggest city, and across the rest of Kazakhstan were facing fuel shortages.