Kazakhstan braces for unrest as fuel prices set to soar
In anticipation of fuel shortages, authorities in Kazakhstan are implementing a ban on fuel exports while simultaneously planning to deregulate their prices. Some voices suggest that these measures could lead to unrest similar to the violent events of January 2022. It's understood that an increase in fuel prices will also lead to a rise in the cost of all other goods and services.
The decision on the fuel export ban, effective Wednesday, was reported that morning by the pro-government portal Zakon. The decision enforces a "ban on the export of gasoline, diesel fuel, 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, composed of Kazakhstan, Russia, Belarus, Armenia, and Kyrgyzstan)."
Additionally, a ban on the export of petroleum products by rail transport has been introduced—with exceptions for exports as part of humanitarian aid or aid provided 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 introduction of the export ban aims to prevent a fuel deficit in light of planned price increases. On Tuesday, Radio Liberty reported that Kazakhstan's authorities plan to gradually deregulate fuel prices, which are currently heavily subsidized by the government, allowing gasoline, diesel, and LPG prices to remain the lowest in Central Asia and among the lowest worldwide.
Fuel is only cheaper in countries that produce and export oil on a large scale, such as the Gulf states. From February 1, prices are expected to increase by 10 percent in retail sales, and in the longer term, even by 40 percent.
In mid-January, Kazakhstani media published draft regulations signed by Energy Minister Almasadam Satkaliyev regarding the increase in fuel prices. Although these draft regulations were subject to public discussion, the outcomes do not influence the introduction of new regulations.
The Ministry of Energy justifies the increases by stating that the Kazakhstani fuel market is unprofitable, and key state-owned enterprises are incurring losses. In the coming years, it is anticipated that LPG consumption will more than double.
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 neighboring countries, which cause the phenomenon of 'gray (unregulated) exports'—hence the decision to ban fuel exports. 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 functioning in 2027.
Liberation of prices: the largest riots in history
Radio Liberty reminded that in January 2022, when the government of Kazakhstan deregulated the prices of LPG, resulting in a doubling of its price, the country experienced the largest riots in its history as an independent state.
Over 200 people were killed, and the trials of both riot participants and law enforcement officers who brutally suppressed them continue to this day. The government promises that this time there will be no "violent" and "shocking" price increases, and the changes will "not entail negative socio-economic consequences."
However, the public seems skeptical. Some express fears that protests could erupt once again. It is known that an increase in fuel prices will also mean an increase in prices of all other goods and services. Fuel prices in Kazakhstan are indeed low (the price of a liter of gasoline is about $0.6, which is under $2.5, and LPG is about $0.25, which is over a dollar), yet the median income officially amounts to $548 per month.
