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Kazakh Fuel Export Ban Triggers Crisis In Tajikistan

  • A Kazakh ban on LPG exports has resulted in a fuel shortage in Tajikistan, causing increased taxi fares and putting pressure on food prices.
  • Tajikistan's reliance on fuel imports and market monopolies exacerbates the fuel crisis, despite low official inflation rates.
  • Speculation surrounds the potential impact of a new Chinese-backed oil refinery, while experts question the feasibility of alternatives to Kazakh and Russian fuel sources.

In the second-largest Tajik city, taxi drivers are complaining of a slowdown in trade as their customers struggle to pay the higher fares linked to a sudden car-fuel shortage that is putting pressure on food prices.

“Fuel prices have gone up, but we need to work and earn a living. It's hard for passengers to endure,” a Khujand-based taxi driver told RFE/RL’s Tajik Service.

“We propose the [new] fare to the passenger. If he agrees to the proposed amount, good; if not, then we part ways,” he said.

The story was the same more than five hours south in the capital, Dushanbe, where Sairambi Gulmirzoeva told RFE/RL’s Tajik Service that she had been waiting for two hours to find a suitably priced taxi to the southern city of Kulob after fares rose from the equivalent of around $5 per seat to around $7 in recent weeks.

And at a Dushanbe hub for long-distance taxis heading to Kulob and east toward the Rasht Valley, driver Rahmonali Jononov complained that customers were few and far between as passengers opted to defer nonessential trips rather than pay the higher fares.

“Passengers complain that it is expensive,” Jononov said. “But we are feeling it, too.”

Fuel shortages happen periodically in Tajikistan but became acute toward the end of last month after the Kazakh Energy Ministry announced on October 20 a three-year ban on exports of liquefied petroleum gas (LPG), propane, and butane.

That decision had a disproportionate effect on Tajikistan, which at the time of the ban relied on imports from Kazakhstan for nearly all of its gas, which in turn accounts for more than half of all fuel consumed by cars in the country.

Experts argue that the local market could avoid such shocks -- and their resultant impact on prices for a range of goods -- with more competition in the market for fuel distribution, where Russia’s Gazprom and companies close to the ruling Rahmon family dominate.

The impact that a soon-to-begin Chinese-backed oil refinery will have on the local fuel market, meanwhile, is a topic of some speculation.

Food Prices Rising Despite Low Official Inflation

Autumn is a time of abundance in Tajikistan, where the climate is favorable for large fruit and vegetable harvests. But this year it has brought a harvest of grumbling at the country’s bazaars over food price increases.

Official statistics for inflation give little away in this regard.

Inflation for Tajikistan in 2022 was officially listed at just over 4 percent -- a very conservative figure given that neighbors such as Kyrgyzstan and Uzbekistan posted double-digit figures as the region reeled from the fallout of Russia’s full-scale invasion of Ukraine and related international sanctions on one of its top trade partners.

But a recent report by the private news agency Asia-Plus and based on numerous anonymous interviews with Tajiks found that many citizens were reporting a decline in their purchasing power despite salary increases of up to 20 percent for state workers last year.

“At the same time, prices are rising not only for imported goods.… Prices for local products are also rising quite noticeably,” the report’s authors wrote.

A weekly country monitoring bulletin published by the World Food Program (WFP) shows regular swings in prices for staples and increases of 12 to 18 percent in the cost of items such as milk, sugar, potatoes, and rice.

The edition of that bulletin for the week of October 23-29 -- the first full week of acute shortages of gas -- cited the cost of a liter of fuel rising 24 percent month-on-month, as drivers traveled from gas station to gas station to fill up beyond the limits imposed in the wake of the ban.

The country’s Anti-Monopoly Service has characterized the shortages and price spikes as “temporary” and last week ordered importers to work out alternative routes from which to receive oil.

Chinese-Built Refinery Waits For Oil

As a net fuel importer, Tajikistan is vulnerable to sudden increases in the cost of hydrocarbons that make life even tougher for a population where incomes average around $200 per month.

RFE/RL’s Tajik Service last week reported small increases in the cost of flour and vegetable oil, and it is as yet unclear how long it will take for gas prices to correct themselves.

As in other areas of economic life in Tajikistan, monopolies are not helping.

In August, as officials were talking up potential imports of fuel from Iran, economic analyst Abdurrahman Hakimzoda told RFE/RL that a lack of independent players in the market for fuel delivery would disadvantage consumers no matter where the fuel was imported from.

Fuel distribution has for a long time been tied to a small group of fuel companies, with Russian state energy giant Gazprom and the ruling family-linked Faroz company dominating the market.

“Another issue is that Tajikistan should try to start the production, processing, and refining of oil products, especially gasoline and gas, inside Tajikistan itself,” Hakimzoda said.

That was presumably the idea when Tajikistan commissioned the construction of a nearly $500 million, 400,000-ton capacity, Chinese-financed oil refinery in President Emomali Rahmon’s home district of Danghara more than a decade ago.

Yet with officials signaling that the refinery is now ready to go, the question of where it will get its crude oil from is a crucial one.

Local economic experts interviewed by RFE/RL’s Tajik Service cast doubt on the optimism of officials regarding Iranian imports, which they argue would likely be more expensive than options from Kazakhstan and Russia for logistical and customs reasons.

Those two countries, in turn, have made plenty of money selling Tajikistan finished hydrocarbon products, with Turkmenistan another supplier of ready-to-use fuel.

Speaking last week at an energy conference in the Turkmen capital, Ashgabat, Tajik Deputy Energy Minister Sharifa Hudobahsh talked up her country’s own hydrocarbon reserves, suggesting that they might be significantly greater than Soviet-era estimates of 900 billion cubic meters of gas and 150 million tons of oil, respectively.

Again, this boast is not new, with deposits in the district of Bokhtar -- part of the same Kulob Province as Danghara -- generating occasional excitement over a potential oil boom in Central Asia’s poorest country.

China’s CNPC and the Tajik company Somon-Oil currently hold licenses in the area, but any journey from exploration to production looks to be a long one.

And that means, for the moment, fuel-price shocks will be the suffering of Tajiks both behind the wheel and at the bazaar.


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