The Ministry of Energy has proposed changing the mechanism for providing subsidised diesel fuel to agricultural producers (APs) during the harvest campaign. The recommended fuel price has been reduced; however, the final cost for certain regions may increase due to transport costs.
WHAT THE MINISTRY IS PROPOSING
According to the Telegram channel "Oil and Gas of Kazakhstan", the Ministry of Energy has recommended supplying subsidised diesel fuel to APs during the harvest period at a price of 300,285 tenge per tonne, or 250–252 tenge per litre, on FCA (loading station) terms, excluding transport costs.
For comparison, during the spring field work period, subsidised diesel fuel was supplied at a price of 315,600 tenge per tonne, or 263 tenge per litre, on CPT (to destination station) terms.
WHAT HAS CHANGED FOR AGRICULTURAL PRODUCERS
Previously, the railway tariff to the destination station was subsidised by the tolling suppliers. It is noted that this ensured a uniform fuel price for all APs, regardless of region.
The proposed mechanism provides for sales on FCA terms, under which transport costs are not included in the recommended price. As a result, the cost of rail transport will depend on the delivery route, and the final price of diesel fuel will vary by region.
HOW THIS COULD AFFECT FUEL PRICES
It is noted that the actual impact of the new mechanism on the cost of subsidised diesel fuel will become clear during the harvest campaign.
At the same time, it is pointed out that for farms located a significant distance from oil refineries, the transport component could be substantial, potentially increasing the final cost of fuel.
