Kyrgyzstan concerned about fuel prices

BISHKEK – With the Kyrgyz planting season about to start, farmers and analysts are wondering whether they will suffer a fuel shortage this year and how much prices will rise. The authorities, who purchase fuel exclusively from Russia, are assuring them that Kyrgyzstan will avoid problems.

Kyrgyz President Almazbek Atambayev is visiting Moscow this week, where he hopes to settle the issue of fuel prices and deliveries, according to media reports.

Atambayev, while still prime minster last year, tried to negotiate an uninterrupted supply of fuel from Russia. “But after the renovations at the Omsk Oil Refinery, where most of the fuel comes from, began last summer, the crisis hit,” said political scientist Tokotgul Kakchekeyev. “The government tried to introduce price controls for oil traders, but it could not control the situation.”

The 2011 deficit was about 31,000 tonnes, analysts said. The fuel crisis led to a 5% to 40% price increase in some places. On July 21, during an emergency visit to Russia, Atambayev reached an agreement with Russian Prime Minister Vladimir Putin to resume the uninterrupted supply of fuel. However, the closer planting season gets, the more farmers worry that last year’s problems will recur.

“If we do not have enough diesel fuel, how can we work in the fields?” asked Osh farmer Zareem Kochubayev. “This will mean a delay, and if we miss the planting season, then it will be too late.”

No recurrence of last year, oil dealer says

Last year’s crisis won’t happen again, said Association of Oil Traders President Zhumakadyr Akeneyev.

“In 2012 it is expected that our Russian partners will supply Kyrgyzstan with 1m tonnes of fuel,” he said. “From past experience, we can say that this should be enough to supply our nation’s needs.”

The country’s oil traders are trying to diversify their sources to break their dependence on Russia, he added, mentioning talks with Azerbaijan that have been unsuccessful so far.

“There is enough fuel for the planting season: at the end of January there were 18,000 tonnes of diesel and 27,000 tonnes of … gasoline in reserve,” he said. “This is one month’s supply. In February, another 50,000-60,000 tonnes of fuel are due to be delivered. Currently we are keeping the price of fuel at about 38 KGS ($0.82) per litre. Oil traders who are not in our association are charging a little more.”

Economist Saidbek Sulpeyev expressed concern over an expected growth in fuel prices. “Last year prices jumped by about 5-10%, and more in some places,” he said. “Given the constant inflation, is there any assurance that prices will not rise again?”

However, January statistics from the Ministry of Economy and Anti-monopoly Regulation on the prices of fuel and other products are promising, he said.

“Fuel and lubricants decreased in price by 0.6% and have not increased, even though the planting season is about to start. This is a good indicator. We’ll see how things look in early March,” Sulpeyev said.

The price of fuel won’t go up, Akeneyev insisted. “Russia has fixed the price up until (its) presidential elections March 4, but even after that, prices are unlikely to increase,” he said.

Akeneyev attributed last year’s crisis to the illegal re-export of imported Russian fuel. “Kyrgyzstan re-exported its fuel, as it is more profitable to sell fuel in Tajikistan and Afghanistan, where prices are higher than in Kyrgyzstan,” he said.

Russia does not charge Kyrgyzstan, an export duty on oil, as it does for Tajikistan and Afghanistan, which opens the door to re-exporting fuel.

Petty smugglers formerly transported up to 400 tonnes of fuel into Tajikistan daily, but smuggling has fallen this year because border guards are doing a better job, Akeneyev said, though he did not provide a current figure.