A shoemaker is always ill shod, or why have gas prices increased again?

Baku/09.15.21/Turan: Today gasoline prices have increased in Azerbaijan. The cost of 1 liter of AI-95 (Premium) gasoline increased from 1.45 manats to 1.6 manats, and AI-98 (Super) from 1.6 manats to 1.9 manats. Uzeir Habibbeyli, an official representative of SOCAR Petroleum (a subsidiary of SOCAR (State Oil Company of the Azerbaijan Republic),  Uzeir Habibbeyli, said that the rise in fuel prices is associated with the rise in prices in the producing country (Russia and Romania).

In June this year, there was already an increase in gasoline prices. Thus, the price for the EU-95 increased from 1.25 to 1.40 manats, and for the EU-98 - from 1.4 to 1.55 manats, Ibrahim Ahmedov, Deputy Head of the Public Relations and Events Department of SOCAR, explained the rise in prices for these types of gasoline in the country by the rise in prices for oil and oil products in the world market. In late July - early August, the price for AI-95 (Premium) increased from 1.4 manats to 1.45 manats, and for AI-98 from 1.55 to 1.60 manats. And this was also due to an increase in the price of the producing country.

Energy expert Ilham Shaban spoke about the reasons for the increase in gasoline prices in the "Difficult Question" program.

According to him, in the fuel markets of neighboring Georgia and Russia, over the past 7 weeks, the prices for gasoline, regardless of the brand, have been steadily growing. The August report of the Georgian International Road Carriers Association "GIRCA" says that over the past year, fuel prices in Georgia have reached a record high. The growth was 35%.

Shaban noted that, unlike in Azerbaijan, the Georgian fuel markets (both wholesale and retail) are not monopolized and operate in full compliance with the laws of the market. In Azerbaijan, the wholesale market is in the hands of SOCAR, and gasoline prices in the retail market are formed by its subjects on the basis of a cartel agreement.

According to the expert, the prices for gasoline in oil-producing Azerbaijan are high because it is in the position of a “shoemaker without boots”. There is no modern oil refinery in the country. The installations of the Baku Oil Refinery do not allow the production of high-octane gasoline grades AI-95 (Premium) and AI-98 (Super). Therefore, Azerbaijan is forced to import high-octane brands of gasoline. And import is always an additional cost.

Shaban noted that according to the statistics of the State Customs Committee of Azerbaijan, at the end of 2020, 60% of high-octane AI-95 (Premium) gasoline was imported from Russia. At the end of 7 months of 2021, the volume of imports of AI-95 (Premium) from Russia amounted to 53.5%. As of August 27 - September 3, the retail price of 1 liter of this gasoline in Russia was in terms of manats from 1, 17 to 1.2 manats. The share of Romania in the total import of AI-95 (Premium) was 38%.

As for AI-98 (Super), earlier it was imported from Belarus within 95-98%. This year, supplies from Belarus decreased in total to 9%, and the lion's share of this brand of gasoline comes from Romania.

“To put an end to the import of fuel in 2008, on the instructions of the head of state, the government prepared a project to modernize the Baku oil refinery, but at the same time errors were made in calculating the cost of the project and the timing of implementation. And then a project was proposed for a large oil refinery and petrochemical plant. However, taking into account the costs of building such a large-scale petrochemical complex, the government ultimately decided not to build a new plant, but to modernize the old refinery,” Shaban said. —0—