Kazakhstan halts fuel exports, raises deregulation concerns
In response to concerns about fuel shortages, the authorities in Kazakhstan are implementing a ban on fuel exports while planning to deregulate fuel prices. Some are concerned that these moves could lead to disturbances similar to the violent events of January 2022. It's understood that an increase in fuel prices will also lead to higher prices for other goods and services.
The decision on the fuel export ban, effective from Wednesday, was announced that morning by the pro-government portal Zakon. The decision prohibits the export of gasoline, diesel fuel, and certain other petroleum products by road transport from Kazakhstan's territory, including to member states of the Eurasian Economic Union (EAEU, consisting of Kazakhstan, Russia, Belarus, Armenia, and Kyrgyzstan).
Additionally, a ban on the export of petroleum products by rail transport has been introduced—except when exported as part of humanitarian aid or to mitigate the effects of natural disasters, accidents, or catastrophes. Exceptions include the export of lubricating oils or aviation fuel under specified conditions. The effective date of the decision has not been specified.
The export ban is intended to prevent a fuel shortage due to planned price increases. On Tuesday, the Radio Liberty portal reported that Kazakhstan's authorities plan to gradually deregulate fuel prices, which are currently heavily subsidized by the government to maintain low prices for gasoline, diesel fuel, and LPG—the lowest in Central Asia and among the lowest globally.
Fuel costs are only cheaper in countries that are major producers and exporters of oil, such as the Gulf states. As of February 1, retail prices are expected to increase by 10 percent, and in the long run, possibly by as much as 40 percent.
In mid-January, Kazakhstani media reported on drafts of regulations signed by Energy Minister Almasadam Satkaliyev concerning the increase in fuel prices. Although these regulation drafts were discussed publicly, the discussions have not affected the introduction of new regulations.
The Ministry of Energy justifies the increases by stating that the Kazakhstani fuel market is unprofitable, with key state-owned enterprises suffering losses. A more than twofold increase in LPG consumption is anticipated in the coming years.
The increases are also justified by "significant price differences in gasoline (from 40 to 138 percent) and diesel (from 20 to 79 percent) compared to neighbouring countries, which leads to 'grey (unregulated) exports'—hence the decision on the fuel export ban. Another reason for the planned price increases is the introduction of a unified energy, oil, gas, and petroleum products market within the EAEU, set to begin in 2027.
Deregulation of prices. The largest riots in history
Radio Liberty reminded readers that when the Kazakhstani government deregulated LPG prices in January 2022, causing prices to double, the country experienced the largest riots in its history as an independent state.
Over 200 people were killed, and the trials of participants and law enforcement officers who brutally suppressed them continue to this day. The government promises there will be no "violent" or "shocking" price increases this time, and the changes will "not entail negative socio-economic consequences."
However, the public remains worried. Some fear that protests could erupt again. It's understood that an increase in fuel prices will also lead to higher prices for other goods and services. Although fuel prices in Kazakhstan are low—about $0.6 per litre (approximately $2.5 per gallon) and LPG is around $0.25 per litre (over a dollar per gallon)—the median income officially amounts to $548 per month.
