Diesel fuel suppliers fulfill their commitment by 100%, diesel fuel price is set in the market economy conditions. This was stated by Bolat Akchulakov, Vice-Minister of Energy of the Republic of Kazakhstan on briefing in the Central Communications Service.
According to Mr. Akchulakov, this year agricultural producers have submitted applications for 394,4 thousand tons of fuel for harvesting campaign. These volumes have already been purchased and distributed by regions.
At the same time, the Ministry cannot influence the final cost of diesel fuel, because the price is set under market relations.
“I would like to stress, that there is no lower-priced fuel in Kazakhstan as the State does not subsidize it. The price is set in the market economy conditions... The fact that oil and gas business contributes in prevention of prices increase is just their own will... Although, it is worth noting that a new excise duty for diesel fuel production is being implemented from June 1 to November 1, 2018, which is 9300 KZT per ton (earlier the excise duty was 540 KZT, - author’s note)”, - said Bolat Akchulakov.
Representatives of oil and gas companies explained how the price is formed. For example, “KazMunayGas Onimderi” LLP supplies to market only 140 tons out of overall 394 tons. Akimats in regions select operators by holding bids and then these operators distribute received volumes among consumers.
“We also act as an Operator in a number of regions. If release price for diesel fuel at factory is 148-149 KZT per liter, and considering transition costs to petroleum-product storage and distribution center we sell on a pre-paid basis: in Kostanay Region at 165-166 KZT, in Akmola Region at 166-167 KZT, in Eastern Kazakhstan Region at 169-170 KZT, in Northern Kazakhstan Region at 168-169 KZT per liter. We do not sell at a higher price! But we need to realize that there are other operators act on the market besides us and we are not responsible for them”, - stated Kuandyk Kulmurzin, General Director of “KazMunayGas Onimderi” LLP.
He also added that one of the tools for prevention of price increase may be inclusion of dishonest operators in relevant register at a regional level with future ban for participation in the bid.
According to Rustem Kabzhanov, Executive Director of Development of Oil and Gas and Energy Industry in KAZENERGY Association there is no direct dependency between the final cost of diesel fuel and oil price.
“Price increase per barrel does not mean that extra money go to pockets of subsurface users. Those commitments that we made at a lower price per barrel were delayed and adjustedе, and now when prices are higher we fulfill them. When the price was decreasing to 30 USD per barrel all the burden lied heavy on oil and gas companies, but oil supply volumes to plants were not decreased and no one was interested at that time at what price that oil was produced and delivered. Supplies continued. Number of taxes and duties did not decrease either. That is why the volumes are considerable and companies that perform their duties on oil delivery for refinery comply with their obligations”, - noted Rustem Kabzhanov.
Bolat Akchulakov, Vice-Minister of Energy added that this year three oil refineries in country are expected to produce 4.5 mln. tons of diesel fuel that would cover 90% of fuel consumption needs. At this, crude suppliers and diesel fuel producers are dominant on the market and are subject to constant control by competition authorities for unjustified price increase.
At the same time, according to data of the National Chamber of Entrepreneurs “Atameken” (NCE), compared to neighboring countries the cost of diesel fuel in Kazakhstan is lower:
Kazakhstan - 0,48 USD per liter (165 KZT),
Russia – 0,69 USD per liter (43,8% higher),
Узбекистан – 0,59 USD per liter (+22,9%),
Украина – 1 USD per liter (two times higher).
Also, according to data of the Department of the Agro-Industrial Complex and Food Industry of NCE, today the share of wheat is 54,8 of total acres. Yield of wheat for the last 5 years did not exceed 12 hwt/ha (for comparison: in developed countries with the same precipitations the yield is 30-50 hwt/ha). Last year average cost for wheat cultivation was 35-40 thousand KZT per ha, including 12% - cost for POL. Farmers sold grains on the market for 42 thousand KZT per ton, i.e. they earned 50,4 thousand KZT in average per 1 ha or 26% of costs.
Thus, we can note that economic efficiency in growing wheat is very low and this fact is noted every year. If farmer continue focusing on growing wheat the only way to improve economic efficiency would be yield enhancement per hectare. According to Department of the Agro-Industrial Complex and Food Industry of NCE efficiency of agricultural land could also be increased by diversifying of cultivation areas.