Fuel Subsidy Cuts Stir Discontent among Passenger Transportation Companies in Baku

A group of passenger transportation companies in Baku have expressed their dissatisfaction with the recent reduction in the diesel fuel subsidy, which has been in effect since February 1. These companies jointly submitted an appeal to Prime Minister Ali Asadov, outlining the challenges they face as a result of this decision. Representatives from "Khalig Faigoglu," one of the companies involved, informed Turan that the subsidy for diesel fuel was terminated immediately after a fare increase of 10 kopecks on January 31, significantly impacting their operations. They stated that the current passenger fares are insufficient to cover their financial expenses, with 81 percent of bus transportation services in Baku being provided by private carriers.

In their appeal, the companies urged the government to reinstate the subsidy, highlighting the adverse economic consequences of its suspension. They noted that the price of diesel fuel in the country had risen by 33 percent in 2021, reaching 80 kopecks. The removal of the subsidy exacerbates the economic situation in the sector, according to the appeal.

The subsidy for diesel fuel is typically calculated as a percentage of the non-cash payment, not exceeding 25 percent, and should be less than 10 percent of the funds generated from passenger transportation services. The Cabinet of Ministers has not yet provided a response to the appeal.

Aydin Huseynov, a member of the committee on Economic Policy, Industry, and Entrepreneurship of the Milli Majlis, spoke to Turan and stressed the importance of businesses operating within their means. He acknowledged that some subsidized sectors may conceal their income to continue receiving subsidies. Huseynov stated that a thorough evaluation of the direct costs involved in passenger transportation is necessary. If companies genuinely fail to cover their expenses with their income, subsidies should be provided as a means of supporting services that benefit citizens and the general population.

Economist Nazim Baydemirli, in an interview with RFE, expressed concerns about the potential for embezzlement facilitated by the subsidy system in Azerbaijan. He questioned the role of the state in providing subsidies and argued that subsidies are not consistent with a true market economy. Baydemirli suggested that, in a market economy, transport companies should not rely on state funding but should instead be awarded specific routes through open tenders. He highlighted the state's involvement in setting tariffs for services provided by the private sector, which he believes demonstrates a mix of socialist and capitalist practices in Azerbaijan.--0--