Recently, monthly volumes of illegal exports of fuel and lubricants from Kazakhstan to neighbouring countries have reached 45,000 tonnes. The Ministry of Energy sees the solution in liberalising the market and abandoning state price regulation on fuel. The editorial staff of FBRK looked into why this measure could become an effective tool in the fight against smuggling.
The current situation on Kazakhstan's fuel and lubricants market is causing serious concern. Over the first ten months of 2024, stocks of petrol fell from 453,000 to 295,000 tonnes, and diesel fuel from 554,000 to 279,000 tonnes. Meanwhile, monthly consumption of petrol is around 425,000 tonnes, and diesel fuel 467,000 tonnes. In November 2024, the government was forced to renew the agreement with Russia on duty-free supplies of oil products.
At the same time, Kazakhstan's oil refineries are showing an increase in production: over 11 months of 2024, output of petrol rose by 2.1%, reaching 4.88 million tonnes, and diesel fuel by 4.3%, totalling 4.9 million tonnes. However, this proves insufficient due to large-scale smuggling.
The main reason for the illegal export of fuel is the significant price difference. In September 2024, a litre of AI-92 petrol in Kazakhstan cost 205 tenge, in Russia 282 tenge, in Kyrgyzstan 381 tenge, and in Uzbekistan 493 tenge. The situation is similar for diesel fuel: 295 tenge in Kazakhstan compared to 350-550 tenge in neighbouring countries.
Attempts to curb smuggling through administrative measures, including a ban on exporting fuel and lubricants by road and introducing differentiated tariffs for foreigners, have not yielded the desired results. Experts note that the actual volumes of illegal exports could be 2-3 times higher than official data.
An analysis of the situation in neighbouring countries reveals different causes of smuggling.
Russia has a surplus of fuel and lubricants production, and the flow of fuel there is driven solely by the price difference. Uzbekistan and Kyrgyzstan face a deficit in their own production, particularly acute in Kyrgyzstan, where domestic output covers only a seventh of demand.
Liberalising the fuel and lubricants market could be an effective solution to the problem. Aligning prices with those in Russia would make smuggling in that direction economically unviable. Supplies to Uzbekistan would also decrease due to reduced margins.
Although Kyrgyzstan is likely to remain a consumer of 'grey' imports, reducing illegal flows in other directions would allow law enforcement agencies to concentrate their efforts on that section of the border.
Thus, liberalising the fuel and lubricants market appears to be the most effective mechanism for combating fuel smuggling. This measure, although it will lead to an increase in domestic prices, will help stabilise the market and ensure the country's energy security.