Sunday, 28 November 2010

NEW GASOLINE SHORTAGES IN UZBEKISTAN

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By Erkin Akhmadov (11/28/2012 issue of the CACI Analyst)

Uzbekistan's capital and many districts are suffering from yet another fuel crisis. Fuel shortages have become a regular occurrence in Uzbekistan since 2010. Severe shortages of gasoline in Tashkent were reported on November 13-14, two weeks earlier than last year. Car drivers queue for several hours to fill up their tanks, and are sometimes forced to wait through the night. No official explanations are given for the massive fuel shortages, leaving those affected to speculate on the reasons for their troubles.

The fall gasoline deficit occurred for the first time in Tashkent in 2010 and has now become a regular and expected event every year. To some observers, the problems are associated with certain economic conditions in Uzbekistan. According to staff at gas stations, the decreasing volumes of car fuel available on the market by the end of each year is explained by the fact that the Uzbekistan's economy exhausts the limit of gasoline consumption established by the government. Thus, the situation is explained by a sharp decrease in the gasoline supply of Uzbekneftprodukt, the state monopoly joint stock company in oil processing and refinement. Representatives of Uzbekneftprodukt, in turn, explain the gasoline deficit by the fact that cars that normally run on natural gas switch to gasoline during winter due to shortages in the gas supply. The company, however, confirmed that the gasoline supply remains on the same level as before.

In fact, Uzbekistan extracts very little oil and even imports limited quantities from Kazakhstan. Independent experts view the shortage of domestically extracted raw oil as the main reason for the current fuel crisis. Uzbekistan's gasoline production decreases on a yearly basis. In 2011, production went down by 10.9 percent compared to the previous year and constituted 1.4 million tons. Furthermore, according to Uzbekistan's State Committee on Statistics the proportion of imported oil products relative to other imports decreased by 1.8 percent during the first three quarters of 2012, compared to the same period in 2011. Meanwhile, the Fergana oil producing plant which actually supplies fuel to the capital and regional gas stations has over the last six months produced 2,300 tons of gasoline above the norm, according to the news agency 12news.uz.
The disruptions in gasoline supply are also often associated with the upcoming rise in gasoline prices. Gasoline prices usually increase twice a year in Uzbekistan: on January 1 and in the beginning of the second half of the year. At present, the winter price increase almost coincides with the fall fuel crisis, while the summer price hike does not cause any significant fuel deficit. Thus, representatives of Uzbekneftprodukt speculate that the current deficit was caused by rumors of upcoming price hikes on gasoline, resulting in car owners buying more gasoline than they normally would in order to keep a supply for the future. Thus, the company claims that the deficit is "artificial" and created by the consumers themselves. Another view has been presented by analysts of the Masterforex-V Academy in Uzbekistan, who claim that gasoline shortages are caused by the increased fuel consumption of the agrarian sector during the harvest season starting in July.

If the level of gasoline supply, as claimed by Uzbekneftprodukt, is on the same level as before, it would be logical to assume that the deficit is artificial, and that certain individuals make money on this temporary crisis. Some local experts think that the situation is crafted due to commercial interests on part of the government.

Based on information appearing in local media in the Urtachirchiq rayon of Tashkent province, only one out of ten gas stations is still operational. The southern provinces of Uzbekistan have experienced the gasoline deficit since about a month. Gasoline is sold irregularly at 3000 Uzbek Sums (US$ 1.1) per liter. In Qashqadarya province the price of gasoline went up to 3500 Uzbek sums (US$ 1.3) per liter. The Khorezm, Samarkand, and Bukhara provinces and Qaraqalpakstan have suffered from gasoline shortages from the beginning of the cotton picking period. In the beginning of 2012, prices for different grades of gasoline varied from US$ 0.81 to US$ 0.99.

Even though any of the reasons for the shortages discussed above could hold true, it is unclear how the situation could be improved. The prices for different products and services normally vary on a regular basis, but variations very rarely cause such sharp deficits of the actual products. The current situation could either stem from a sharp decrease in the volume of fuel supply that the authorities are for some reason unable to admit, or from an interest in "artificially" maintaining the fuel crisis. ailway, then Azerbaijan could cease its economic projects in Georgia and ensure support for the separatist regimes in Abkhazia and South Ossetia.

With reference to Zakareishvili's statement, the November 19 report from Abkhazia's Foreign Ministry stated that "Whatever promises are made ... giving us 'everything except recognition,' ... [or] 'opening a railway link via Abkhazia,' ... we are quite well-informed to avoid falling into all kinds of political and diplomatic traps, which some would like to place around Abkhazia." The language can be considered a message to the new Georgian government that Abkhazia will not consider any initiatives except ones relating to the region's international status.

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