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Economy Ministry predicts 15 soms price increase for fuel and lubricants in 2021

The Ministry of Economy of Kyrgyzstan predicts an increase in prices for fuel and lubricants in Kyrgyzstan by 7-15 soms. The ministry reported.

According to the Adviser to the head of the ministry, Nurgul Akimova, the ban on the sale of gasoline with a class below Euro 5, which is to be imposed in August, will affect the cost of fuel.

«When Kyrgyzstan joined the EAEU, the authorities signed a technical regulation, according to which the country should switch to Euro 5 gasoline. This is an environmental standard that regulates the content of harmful substances in exhaust gases. The EAEU technical regulations concerning the prohibition of the import and sale of non-environmentally friendly types of fuel and lubricants in Kyrgyzstan were to enter into force on August 12, 2019. But the Ministry of Economy turned to the Eurasian Commission with a request for a postponement. Kyrgyzstan was given a reprieve until August 2021. After this period, oil traders will be prohibited from importing, producing fuels and lubricants of classes lower than K-4 and K-5 (analogous to Euro 4 and Euro 5) and also selling non-environmentally friendly fuel on the domestic market,» Nurgul Akimova stressed.

The Ministry of Economy calculated that transportation costs account for 25 percent of the budget for the Kyrgyz manufacturers. Transport costs in countries with access to the sea amount to only 5-7 percent.

«If businessmen do not buy «affordable» fuel and lubricants, but are forced to buy expensive Euro 4 and Euro 5, the prices will rise, and this will cause protests. As for car owners who are not involved in the transportation of goods and passengers, a small part of them chooses fuel of ecological class — this is because of the price,» Nurgul Akimova added.

She noted that not only the price would rise, but also the cost of reequipping of refineries. It will cost local companies 100 percent of working capital. These investments will pay off at least, according to the minister’s adviser, in six years. «Producers will have to raise prices for local gasoline, otherwise they will go bankrupt. Even if local producers process the imported raw materials, there will be costs, which will be half as high as at present,» Nurgul Akimova believes.

Consent to general regulations of the EAEU and raising the fuel class to Euro 4 and Euro 5 will in any case require modernization of the refineries.

Nurgul Akimova

The Ministry of Economy reminds: the state cannot take a break to fulfill obligations under technical regulations and hope that the refineries themselves will solve the problem. Economists note that the investment attractiveness of Kyrgyz factories is questionable.