Cartel Agreement or Reasons for High Price of Gasoline Brand AI 95

Baku / 03.05.17 / Turan: Relative stability of the dollar exchange rate observed since the beginning of February 2017 does not affect prices.

Prices that grew during the period of strengthening the dollar remained at a high level, despite the fact that from February to May the exchange rate of the American currency fell by more than 22 gapik.

In particular, stably high prices refer to gasoline AI 95, which is imported to Azerbaijan from other countries. Note that the price of this brand of gasoline is not regulated by the Tariff Council. In theory, the price should be formed by the market.

In September 2016, when the dollar exchange rate was 1.6362 manat, the above brand of gasoline cost 90 gapik. Subsequently, the dollar rate was constantly rising and in early February 2017 it was worth 1.92 manat. During this time in two stages the price for gasoline AI 95 was raised and it reached 1.15 manat. A natural explanation for the rise in gasoline prices was the depreciation of the national currency.

However, for the third month the dollar rate stabilized, falling to the level of 1.70 manat, which cannot be said about the brand of gasoline AI 95, which remained at its high level.

The head of the Oil Research Center Ilham Shaban explains this "phenomenon" of the Azerbaijani economy by the presence of a monopoly on different segments of goods.

He noted that in general, we did not see any decrease in prices on any segments, which would automatically happen after the strengthening of the national currency.

"Imports are concentrated in the hands of several corporations that determine the prices of goods. This is an instrument in the hands of the government to replenish the budget," he believes.

A spokesman for Azpetrol, Jamal Zeynalov, said in an interview with Turan that AI 95 gasoline now sold was purchased on the basis of a long-term contract when the dollar was high. Another reason for not lowering prices, as he indicated, is the seasonal factor, noting that in connection with the approach of the summer season, the price of gasoline in the countries, from which Azpetrol buys, is growing.

"The price for AI95 gasoline can be lowered only if the dollar is established at 1.50 manat," Zeynalov said.

Shaban in his turn stressed that at present in Azerbaijan there is a cartel agreement of the companies selling gasoline.

"We have gas stations belonging to different companies. However, prices in all gas stations grew at the same time, reaching the same level. They do not differ from each other even by 5 gapik. But, for some reason, this does not raise suspicions at the antimonopoly service under the Ministry of Economics," he said.

The press service of the Ministry of Economy and the antimonopoly service refused to answer Turan's question about why they do not suspect identical prices for petrol AI 95 at all gasoline stations.      -71D-