A 25% price hike in AI-92 gasoline was announced by Azerbaijan’s Tariff (Price) Council at midnight on July 14.
As of yesterday, the price of a liter of AI-92 gasoline has risen from .7 AZN (0.41 USD) to .9 AZN (0.53 USD).
The price hike is explained as a need to: improve the quality of motor fuels produced; protect and improve the condition of the environment; and expand investment opportunities to meet domestic demand, modernization and the reconstruction of the oil-refining industry.
The Tariff Council also stated that the growth in domestic demand for gas has limited the export opportunities of SOCAR (State Oil Company of Azerbaijan) and reduces income in foreign currency.
The Tariff Council noted in its announcement that even after the price-hike, prices for gasoline in Azerbaijan will still be some of the lowest across the countries of the former Soviet Union and in the region. For comparison, the announcement points out, one liter of gasoline in Georgia costs around 0.86 USD, in Russia - 0.61 USD, in Belarus – 0.59 USD, in Ukraine - 0.98 USD.
Co-founder of the Center for Economic Research Qubad Ibadoglu says the price-hike will not be limited to the AI-92 category of gasoline, and that other types will be affected as well in due time.
“The price hike in gasoline will have two effects – psychological (panic) and economic (increase in expenses). The psychological effect will be short term, the economic one – long-term and stable. When gasoline quickly and sharply rises in cost, it is ‘impossible’ to retain a stable transport tariff. For that reason one should expect to see a rise in the cost of services in the sphere of passenger transportation, including taxis and public transport.
In addition, an increase in expenses for ground, air and maritime transport will play a strong role in the rise in costs of basic consumer goods. In the second half of the year, we can expect to see the inflation process pick up speed. Inflation in the first half of 2017 stood at about 13.9%”, Ibadoglu wrote on his personal Facebook page.
Economist Samir Aliyev believes that the comparison of the Tariff Council between other countries in the region and Azerbaijan is unfair.
“Now gasoline will cost 53 cents – that is, more expensive than in Kazakhstan. Belarus isn’t an oil-producing country, but gasoline is only 6 cents more expensive than in Azerbaijan”.