Petrol stations: under the threat of bankruptcy

- City of Shymkent

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Refuelers of South Kazakhstan asked to return to the state regulation of petrol prices

The catastrophic situation in South Kazakhstan region, could lead to the bankruptcy of 300 medium and small traders of petroleum products. The reason for that - the prices on the most popular brands of petrol are set by the government. This was stated by chairman of the Association "Zhanar-Zhagarmay" of SKR Kaypbek Kambarov at a meeting with heads of local gas stations. He believes that if you do not return to state control of prices of petroleum products, the major players of the fuel market will simply swallow medium and small entities. By the way, the reverse process took place right away - every fifth business, engaged in sale of fuel in South Kazakhstan, is closed today. Deputy akim of the region was specially invited to the meeting, expecting immediate assistance on the local level.

"Until the demand for petroleum products in the country will not be completely covered, it was premature to lower the prices for diesel and petrol A-92, which is recognized as a truly" popular ". Regulation of prices for petroleum products is necessary, as our country depends on imports and around 30% of oil are imported from outside", - said K. Kambarov.

As you know, during state regulation oil products were delivered to the regions through the operators according to the volumes allocated by the Ministry of Energy of Kazakhstan. Part of the volumes was transferred to large companies, the so-called resource holders, who then dumped oil for free trade. The Ministry of Energy had a clear delivery schedule, step by step control of sales of fuel and lubricants until the last recipient of this whole chain. After the abolition of state regulation have sunk into oblivion transparency, accessibility, accounting, control and monitoring of prices by local executive bodies for the supply of petroleum products in every district, village and to each station. As a consequence - the price of oil rose and is much higher than what has been established by the Ministry on the allocated petroleum products by them.

"We want to make it through a tough distribution through Akimats, because now there is no transparency, no publicity, who gets how much", - lamented the chairman of the association.

Every year the number of allocated oil products to operators reduces and increase volumes for such large dominant as SinoOil, Helios, KazMunaiGaz, which are send then for free trade. In two years, the volume has increased from 13 percent to 47. Because of this more than 300 petrol stations are forced to buy oil at a high wholesale price. In connection with the release of prices for petroleum products, today wholesale resource holders sell petroleum to subjects of small and medium businesses at a price slightly below the retail price of petroleum products sold at their petrol stations. For example, if gasoline AI-92 in the free market is 135 tenge, wholesale price of this fuel is 132-133 tenge.

Today, only the price of gasoline AI-80 is regulated, the amount of which in SKR is 3-4 tons per month, while the need for it is 15 thousand tons per month.

"All this leads to the fact that the subjects of small and medium businesses become uncompetitive as they are forced to sell petroleum products purchased by them at a higher price (a premium of 7-8 tenge to cover their costs and to receive at least some income). They can’t resist and die in this unfair competition".

According to chairman of the association, there are facts of supply of poor quality gasoline, it is possible that this is A 80, which is simply manually converted to the 92. Why is this done? Just to survive in the fuel market.

The participants of the meeting touched upon the problem of the lack of information about the oil refining and, most importantly, about the sale of petroleum products of Shymkent refinery.

"It is not known how many products are processed and where goes recycled oil from the local refineries. There is no transparency. And it also affects the growth of gasoline prices. During repair of the refinery plant, the operators were forced to purchase petroleum products at Pavlodar refinery. However, the plant under repair, was selling continuously petroleum products at a high price (!)

The main outcome of the meeting: while all three refineries will not meet the needs of the country, the Ministry of Energy needs to continue the supply of petroleum products in the policy areas under the schedule of distribution, with the participation of operators and sales volumes to each rural petrol station. It requires monitoring of prices through regional akimats, control over pricing, changes in the percentage allocation of petroleum products for the benefit of small and medium businesses involved in this market.

"We ask NCE "Atameken" for assistance, because it affects social stability and successful development of economy of the South-Kazakhstan region", - a petition was signed by all participants.

What about local government? Deputy akim of the region Baurzhan Jamalov supported entrepreneurs:

"Cancelation of the state regulation - is, of course, a political decision of our government for strengthening of business on the fuel market of the country. And to change it, even if it is introduced in a pilot mode, is difficult. But in any case, you yourself need to justify everything: how much tax revenue the region will lose, if you suddenly lose the small and medium-sized businesses in the oil market? How many jobs will be lost and social security contributions? You will be able to fight back and to prove that it is better to return the state regulation, the experiment will be canceled then", - he concluded.