The free fuel market will solve the problem
Kazakhstan has started to exchange fuel. In the first six trading days, the price increased by 30%. The exchange was launched during the transition of the fuel market to a market economy and opening up. Throughout the trading week, depending on the manufacturer, the price of AI-92 rose from a starting price of 169 tenge per ton to 179,000 tenge, that is, from 125 tenge per liter to 132 tenge. As a result of the previous trading day, the price of AI-92 was 204 to 213,000 tenge per ton, or 152 to 159 tenge per liter. In the first trading day, the exchange sold a total of 17,290 tons of gasoline, and according to the Ministry of Energy’s plan, 275,787 tons of gasoline should be supplied to the domestic market in April. Most-through communication.
According to the International Energy Agency (International Energy Agency), Kazakhstan ranks 11th in the world in terms of energy subsidies in 2019, most of which rely on coal-the actual price is 54.5% lower than the equilibrium price. The total subsidy is estimated at US$6.6 billion. Keeping prices lower than market prices, or even lower than the level of return on investment, will lead to insufficient funds in the industry. The coal and natural gas markets only need to go through the current situation through the fuel market, and must comply with strict administrative regulations and measures until 2016: first, directly determine the selling price of fuel, and then from 2011, the maximum cost is limited. Since 2016, prices have begun to fluctuate freely, but the market is still subject to strict supervision, for example, the purchase of oil from refineries at cost prices from producers and no fuel sales in a highly competitive environment.
We should not forget that we are moving towards a common energy market within the EAEU. The obligation to establish such a market is stipulated in the union agreement. According to the plan, the exchange should start operations on January 1, 2025. As part of the move to the single market, the exchange has also been partially activated. The project to create a common market is based on the idea of developing organized exchange transactions and ensuring that all market participants have equal access to trading opportunities. This will create a competitive environment for them and ensure transparency in pricing.
The full launch of a common market for petroleum and petroleum products will increase the accessibility of EAEU member states’ companies and people, expand the sales market of independent producers, and ultimately may affect consumers’ prices for petroleum products. But for Kazakhstan, this will be an increase because we not only have the cheapest gasoline in EAEU, but also one of the cheapest gasoline in the world. In neighboring Russia, the average price of AI-92 is 250 tenge per liter. First, we will coordinate our market with the Russian Federation.
The price of fuel in Kazakhstan has been artificially restricted for a long time. The funds allocated to the modernization of the refinery can not only completely shut down the demand in the domestic market, but also increase fuel exports, but it is not included in the price. In addition, due to industry regulation, the increase in consumption tax early last year was not reflected in the price increase. As the fuel exchange transitioned to public trading, these delay factors played a role. After the administrative restrictions were lifted, prices rose as usual.
The industry benefits from free fuel prices-not only can they pay for expensive modernization, but they can also think about the future, which can increase export potential by diversifying our oil exports. Competitive prices are the common sense of the free market. This will save us from standing on the border and checking who and how much fuel has been added to neighboring Russia. Instead, they can be sold openly and privately there, providing high wages and production. jobs.
The topic of gasoline is still one of the most intense topics in society. In our country (such as Russia), the price of transportation is not included in the price of gasoline, and the price of gasoline is regarded as a fair distribution of taxes, because some people use cars once a week, and some people use cars frequently. In this case, according to the latest estimate of the Ministry of Energy, the price of gasoline will rise due to the cost of the transportation tax, which is about 13.3 tenge. Those who use cars regularly will pay more to the national treasury. This kind of dialogue has been going on in our parliament for a long time, and the changes in transportation tax can be incorporated into the general tax system reform along with the gradual personal income tax scale.
Should we wait for the tax reform in 2021?
The main thing is not to scare away investors
Gasoline prices will continue to rise to economically reasonable levels. So far, there is no statement about fully coordinating the market with the Russian Federation, and the price is unlikely to reach the price of Russia, but with more and more prices, by this summer, the price is expected to rise to 200 tenge per liter. The amount is exchanged through fuel.
Andrey Chebotarev, an analyst at the Kazakhstan International Investment Company EXANTE